Baird Upgrades Intel To Outperform

Baird's Tristan Gerra upgraded the rating for Intel Corporation INTC to Outperform, while raising the price target from $33 to $38. He believes Intel is poised to resume EPS growth from 2017 onwards. "Assuming a low single-digit decline in annual PC revenue and a high single-digit growth rate in data center (below Intel's 15% growth target), DCG mix becomes large enough to drive EPS growth starting in 2017 and in years forward, in our view," analyst Tristan Gerra stated. Intel's LTE technology has matured, and is improving the company's positioning for a potential tier-one smartphone ramp in 2H16. The ramp prospects for the company's 7360 baseband have also improved in recent months, Gerra said. Field research indicates that datacenter related demand is tracking ahead of expectations in 1Q, and Grantley price cuts could further help growth in 2Q. The analyst expects PC units to be down 10 percent q/q in 1Q, with the initial outlook for 2Q being flat to up low-single-digit q/q. Full year visibility in PCs remains very low, given the uncertainty related to the timing of Windows 10 upgrades in enterprise PCs, Gerra commented.