Shares of Intel (INTC) are up 68 cents, or 3%, at $24.08 this morning after the company beat Q3 estimates last night and forecast the current quarter’s estimate well above consensus despite the lingering sluggishness in consumer PC sales in developed markets, and said that it added another $10 billion to its buyback authorization, to bring the total repurchase capacity to over $14 billion.
This morning, price targets and estimates are mostly going up across the board from the bulls and even some bears. Those who’ve been negative on the company’s outlook continue to shake their heads at just where Intel is coming up with such strong results amidst a terrible PC market.
Bullish!
Craig Ellis, Caris & Co.: Reiterates a Buy rating and raises his price target to $28 from $27. Ellis raises his estimates for 2011 to $2.44 per share in profit form $2.36, and for 2012 to $2.63 per share from $2.48 previously. He notes the shares trade at just 8.9 times P/E to the 2012 estimate, and adds “the dividend yield offers a great backstop at 3.4% (FCF yield 11.1%).” Ellis’s target is a 2.3 times multiple of enterprise value to sales. There is “potential for a further shift in stock sentiment from a deeply negative view a few quarters ago toward a neutral-to-positive bias in light of company- specific and secular positives at play,” he thinks, which include Intel being “on track” with 22-nanometer technology; the “ultra book” laptops juicing consumer sales; the data center gaining on shipment of Intel’s “Romley” processor for servers; the “tailwinds” of emerging markets and embedded processor markets; and the new $10 billion buyback funds added to the repurchase program.
David Wong, Wells Fargo: Reiterates an Outperform rating and raises his price range from a prior $26 to $32 to $28 to $34. “We think Intel’s September quarter results and December guidance were excellent,” writes Wong. “We think Intel could emerge as one of the best performing chip companies in terms of sequential growth in the September and December quarters.” He raises his 2011 EPS estimate to $2.48 from $2.43, and raises his 2012 estimate to $2.80 per share form a prior $2.74. “Intel�s 9.2% sequential sales growth for September is a fair amount above AMD�s recently updated guidance for 4-6% sequential sales growth (constrained by AMD-specific supply issues). This suggests to us, Intel probably gained microprocessor revenue market share and possibly unit share.”
Quinn Bolton, Needham & Co.: Reiterates a Buy rating and raises his price target to $26 from $25. He raises his 2011 estimates to $54.71 billion in revenue and $2.44 in EPS from a prior $53.88 billion and $2.37. From 2012, he now sees $58 billion in revenue and $2.60 in EPS, versus $57.1 billion and $2.50 previously. “Business trends experienced in 1H11 continued to play out in 3Q11 with strength in the emerging markets and enterprise segments offsetting sluggish consumer demand in North America and Europe. On a positive note, Data Center revenue, which only grew 3% Q/Q in 3Q11, should benefit in 4Q11 from the volume ramp of Romley microprocessors.”
Bearish!
Bobby Burleson, Canaccord Genuity: Reiterates a Hold rating while raising his price target to $24 from $22. Burleson now estimates $14.7 billion in revenue and 70 cents EPS this quarter, up from $14.5 billion and 68 cents. For 2012, his estimate goes to $58.65 billion and $2.70 per share from $57.78 billion and $2.51 per share. “Near term, Intel’s notebook MPU unit volumes, up double digits Q/Q in Q3, appear to be growing at twice the rate of notebook production. Furthermore, a compelling consumer upgrade cycle isn�t likely to begin until Windows 8 late next year, and will coincide with competition from ARM.”
Craig Berger, FBR Capital: Reiterates a Mrket Perform rating while raising his price target to $29 from $27. He raised his 2011 EPS estimate to $2.60 from $2.50, and raised his 2012 estimate to $2.75 from $2.50. Berger would like Intel to be more forthcoming about the nature of this emerging market strength no one else sees: “After speaking with several investors, it is clear they are confused about the magnitude of unit strength Intel is seeing relative to (a) market research about the PC market, (b) Dell and HP revenue growth performance, and (c) ODM build data, with Intel clearly outperforming all of these buckets. The firm insists that emerging markets are driving upside (if so, where is the upside for DRAM vendors, LCD vendors, etc.?) but fails to present evidence here. For now, it is somewhat bewildering and likely to keep a lid on shares (along with concerns about Windows on ARM penetration into the notebook market).”
Chris Caso, Susquehanna Financial Group: reiterates a Neutral rating and a $21 price target. “While INTC cited emerging market strength for its performance in 3Q, we think investors likely left the INTC call concerned about why INTC is the only company in the PC supply chain that appears to have seen such strength. In addition, the report does nothing to address investor concerns about competitive challenges upon the release of Windows 8 � and these concerns really cannot be put to bed until Windows 8 is finally released.” There are “no catalysts” between now and mid-2012, he writes. The “downside risk” for Caso’s bearish stance is $26, he writes.
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