Intel's Earnings Beat: The Sell-Side Weighs In

Intel Corporation INTC shares were up 10 percent Friday after the company’s fourth-quarter earnings report blew expectations out of the water.

A number of Wall Street analysts weighed in on Intel following the report.

Voices From The Street

Oppenheimer analyst Rick Schafer said Intel’s impressive growth is coming at a high price. “While 4Q's 20-percent-plus growth in DCG, IoT, and PSG impressed, 2018 GM will be pressured by a higher mix of adjacent revenue and 10nm ramps, limiting EPS leverage,” Schafer said. 

Morgan Stanley analyst Joseph Moore said the data center business was the main driver in Q4. “The strong 3Q and 4Q business trends don't really change our long term view of Intel's prospects — we remain on the sidelines and would look to take profits on strength — but certainly investor sentiment is starting to turn,” Moore said. 

Tigress Financial analyst Ivan Feinseth said strong chip demand is much more important than Intel’s recent security issues. “Intel’s business momentum seems to be much stronger than I originally anticipated,” Feinseth said, projecting that the stock could reach the mid-$50s in the near-term.

KeyBanc analyst Michael McConnell said Intel’s data center numbers were exceptional. “While secular growth at cloud customers (up 35 percent y/y), share gains at networking customers (up 16 percent y/y) and adjacent sales growth (up 35 percent y/y) continued, the biggest surprise was resurgent growth from the long-maligned enterprise customer segment, which grew 11 percent y/y,” McConnell said.

Stifel analyst Kevin Cassidy said Intel’s PC and data center processors and capital returns are a winning recipe for investors. “We believe the company is poised to benefit from a quicker adoption rate in its latest generation Xeon Scalable Platform driven by higher volume of pre-shipments, a large generation over generation performance improvement, early cycle upgrades from communication service providers and competition within Cloud Service Providers,” Cassidy said. 

Credit Suisse analyst John Pitzer said Intel is proving valuation critics wrong. “With better execution, conservative estimates and significant investor skepticism, we are willing to suffer through high valuation,” Pitzer said.

Ratings And Price Targets

Wall Street is mostly bullish on Intel’s stock following the blowout quarter, but some firms are more bullish than others:

• Oppenheimer has a Perform rating and no price target.
• Morgan Stanley has an Equal-Weight rating and $43 price target.
• KeyBanc has an Overweight rating and $60 price target.
• Stifel has a Buy rating and $53 price target.
• Credit Suisse has an Outperform rating and $55 price target.

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