Intel, Texas Instruments To Kickstart Chip Earnings With 'Better-Than-Feared' Results

Major chipmakers Intel Corporation INTC and Texas Instruments Incorporated TXN, are scheduled to report earnings next week.

Texas Instruments and Intel are scheduled to report after the close Tuesday and Thursday, respectively. 

The Intel Analyst: Rosenblatt Securities analyst Hans Mosesmann reiterated a Sell rating on Intel with a $45 price target and maintained a Buy rating on Texas Instruments with a $135 price target. 

The Intel Takeaways: Intel is expected to report second-quarter sales slightly above the consensus estimate, which would represent a mid-single-digit sequential decline, Mosesmann said in a Wednesday note.

The broader trends are likely to be better than feared, the analyst said.

He expects quarter-over-quarter declines in the Client Computing Group, or CCG, and the Data Center Group.

The CCG, Mosesmann said, is hit by lower demand for IoT and Mobileye, offset by strong demand from cloud and communication infrastructure customers.

Mosesmann braces for EPS coming in slightly ahead of the $1.11 consensus.

He also painted a less sanguine picture for Intel in the second half, as global GDP contracts, PC total addressable market weakens and data center demand from Enterprise & Government segment softens.

"In addition to the aforementioned trends, we continue to see a multitude of symptoms pertaining to Intel and its business model (here), including Jim Keller's departure, a struggling process technology roadmap, and CPU market share loss to Advanced Micro Devices, Inc. AMD," Rosenblatt said.

See also: Morgan Stanley's Semiconductor Picks: Qualcomm, Qorvo, Lam Research Over Intel, Nvidia

The Texas Instruments Thesis: Rosenblatt expects Texas Instruments to report slightly-above-consensus sales due to less-than-anticipated reduction in orders from customers and better than feared trends during the quarter.

EPS will potentially come slightly above consensus estimates of 86 cents, Mosesmann said.

The analyst forecasts low to mid-teens sequential decline in Analog, which accounts for roughly two-thirds of the company's revenues and the Embedded Processing business.

"We believe the Street will likely focus on the 3Q20 guide, as TI is one of the first semiconductor companies to report and is a decent proxy for the rest of the sector," Mosesmann said.

The analyst sees Texas Instruments as one of the better-positioned semiconductor companies, given its strong financials and its previous experience in weathering a tough macroeconomic environment.