4 Intel Analysts On What New CEO Means For Chipmaker's Market Share, Turnaround

Intel Corporation INTC announced a new CEO Wednesday, sending the chipmaker's shares higher by about 7%.

The Intel Analysts: Needham analyst Quinn Bolton upgraded Intel from Hold to Buy and assigned a $70 price target.

BMO Capital Markets analyst Ambrish Srivastava upgraded Intel shares from Market Perform to Outperform and lifted the price target from $50 to $70.

Morgan Stanley analyst Joseph Moore upgraded Intel from Equal-weight to Overweight and increased the price target from $60 to $70.

Rosenblatt Securities analyst Hans Mosesmann maintained a Sell rating and $40 price target.

How Gelsinger Could Reestablish Processor Leadership: With incoming CEO Pat Gelsinger's technical acumen, he should be able to identify any weaknesses in Intel's processor roadmap and lead it to reestablish processor performance leadership, Needham analyst Bolton said in a note. 

Gelsinger should be able to motivate the engineering teams at Intel, and if the company is able to stem its market share losses, its earnings outlook will improve and its valuation multiple will expand, the analyst said.

The higher-than-expected capital expenditure Taiwan Semiconductor Mfg. Co. Ltd. TSM announced for 2021 is a strong signal that Intel will announce meaningful programs to outsource some advanced manufacturing, thereby reducing its capital intensity, improving free cash flow and improving shareholder returns, he said. 

Gelsinger Is The Right Choice, BMO Says: Intel has an opportunity with a new CEO at the helm, BMO analyst Srivastava said.

Although big changes aren't likely in the near-term, the company could benefit from the richness of experience that Gelsinger brings from his prior tenure at Intel as well as his experience running VMware, Inc. VMW, the analyst said. 

Gelsinger is the right person to address the daunting, but not insurmountable, challenges that Intel faces, he said. 

"And given the series of disappointments from Intel, even a few incremental right steps ought to serve as a catalyst for shares." 

Related Link: 5 Reasons To Stay Positive On Intel

Morgan Stanley On Intel's CEO Transition: Intel's relative valuation versus the semiconductor group has compressed meaningfully, as the company faces significant technology challenges due to self-inflicted problems and Advanced Micro Devices, Inc.'s AMD product success, Morgan Stanley analyst Moore said.

Therefore, Intel's market share will most likely decline in the period from 2021 to 2022, the analyst said. 

Intel has no quick turnaround or financial fix, he said. 

Intel's positives include good decision making around critical make vs. buy outsourcing decisions, and executing on roadmap timing, Moore said.

AMD will continue to be a substantial factor and will gain share, but Intel can still protect the value of its incumbency just by executing on what's in front of it, the analyst said.  

On the flipside, if there is risk to product launch timelines, a clearer disclosure of the risks is likely, as a more customer- and technology-centric management team will want to be more transparent and open about the roadmap, he said. 

Moore sees the potential for downside in the near-term, as he said Intel could stop optimizing around near-term earnings and focus on what needs to be done to protect its incumbency. 

Why Gelsinger's Appointment Could Be A Little Late: Gelsinger is the best option for Intel at this time, but he should have taken over the reins from Brian Krzanich in early 2019, Rosenblatt analyst Mosesmann said.

"Indeed, to fix Intel will require what former Jim Keller Intel architect wanted: a total CPU reset. Build a CPU from scratch for the new AI world," the analyst said.

"That is a many, many year endeavor."

In the meantime, the analyst expects AMD, Broadcom Inc AVGO, Marvell Technology Group Ltd. MRVL, NVIDIA Corporation NVDA and Xilinx, Inc. XLNX to accelerate share gains in the key compute, networking, and storage segment.

INTC Price Action: At last check, Intel shares were rising 4.76% to $59.66. 

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