Summit Upgrades Intel To Buy; Sees Improvement In PC, Cloud

• Shares of Intel Corporation INTC rose 8.72 percent over the last month, reaching a high of $32.46 on October 13.
• Srini Nandury of Summit Research has upgraded the company from Hold to Buy, with a price target of $40.
• Intel was able to easily meet the C3Q15 guidance, despite a decline in units. Nandury also stated that Skylake, DDR4 and Windows 10 were “doing extremely well.”

Analyst Srini Nandury mentioned that “emerging economies were really not buying due to the strong dollar and macroeconomic concerns, though we are seeing some signs of stabilization,” while Skylake, DDR4 and Windows 10 were driving ASP appreciation against a “tepid backdrop,”

The company said, however, that there could be gross margin pressure in CQ4 due to increased expenses related to the launch of 14nm in Ireland, although this was expected to be resolved going forward and offer a tailwind.

Intel has conservatively guided to an in-line CQ4, Nandury stated, while mentioning that “top of the line PCs are likely to experience a positive trifecta” in terms of operating system, memory and processor.

In addition, given that the Chinese economy and tablet sales have been lackluster, Nandury believes that the company is likely to have spent lower contra-revenue. Intel also mentioned that “contra-revenue was lower now than ever before.”

With regard to smartphones, Intel’s “game plan” is to focus specifically on the modem.