Intel Faces Turbulence As 6 Analysts Weigh In On Restructuring, Earnings Miss: 'We Don't See An Easy Fix'

Intel Corp INTC has made headlines with its recent announcement of significant restructuring and disappointing quarterly earnings. The tech giant reported earnings of just 2 cents per share, falling dramatically short of the analyst consensus estimate of 10 cents.

This represents a staggering 84.62% decrease from the same period last year. Intel’s response includes a major $10 billion cost-reduction plan aimed at streamlining operations and reducing headcount by over 15%, with the majority of cuts expected by the end of 2024.

Additionally, the company will suspend its dividend starting in Q4 2024. Analysts are reacting with a mix of skepticism and cautious optimism. Here’s how key industry voices are interpreting the latest developments.

• BofA Securities analyst Vivek Arya downgraded the stock to Underperform with a price target of $23, down from $35.
• Cantor Fitzgerald analyst C.J. Muse maintains a Neutral rating with a revised price target of $27, down from $40.
• Wedbush analyst Matt Bryson from Wedbush Securities maintains a Neutral rating with a 12-month price target of $25, reduced from $32.50.
• Goldman Sachs analyst Toshiya Hari reiterates a Sell rating with a new price target of $22, down from $29.
• Truist Securities analyst William Stein of Truist Securities maintains a Hold rating with a price target of $25, down from $33.
• Roth/MKM analyst Suji Desilva retains a Neutral rating, lowering the price target to $25 from $35.

Read Also: Intel Analyst Flags ‘Operational Missteps’ After Earnings Shock

BofA Securities: ‘No Quick Fix, Downgrade to Underperform’

Arya has taken a dim view of Intel's prospects, noting that the restructuring plan, while necessary, does not address Intel’s deeper competitive and strategic challenges. “We don’t see a quick or easy fix to competitive, financial, strategic, and manufacturing risks,” Arya said.

He cites Intel's inability to compete effectively against agile fabless and foundry rivals as a significant concern. Arya's revised forecasts indicate a 75% reduction in EPS estimates for 2024, reflecting ongoing profitability challenges.

Cantor Fitzgerald: ‘A Perfect Storm, Reiterates Neutral’

Muse describes the situation as a “perfect storm” for Intel. He highlights the impact of transitioning Meteor Lake to Intel’s new manufacturing line as a major factor in the company’s margin issues. Despite the restructuring and cost-cutting measures, Muse remains cautious, emphasizing that Intel's success in executing its strategic plans will be critical.

“The magnitude of the sell-off after-hours is no surprise,” Muse remarked, reflecting the market's reaction to Intel's restructuring and dividend suspension.

Wedbush: ‘Another Reset to Expectations’

Bryson expected mixed results but was struck by the extent of the miss. He believes Intel's technological transitions are still a major uncertainty.

“We are retaining our NEUTRAL view, while reducing our PT in-line with our now lower estimates,” Bryson said, noting that Intel must demonstrate more promising signs of progress to regain investor confidence.

Goldman Sachs: ‘Sell on Data Center and Margin Concerns’

Hari cites ongoing challenges in Intel’s Data Center business and negative margin revisions as reasons for his bearish stance. “We do not consider [the restructuring] to be sufficient for a sustained recovery in the company's competitive position,” Hari commented.

His revised EPS estimates reflect a 63% reduction for 2024, underscoring the difficulties Intel faces in regaining market share.

Truist Securities: ‘Hold Rating Unchanged Amid Challenges’

Stein acknowledges the significant restructuring but remains cautious about Intel's long-term prospects. “The LT story of eventual product and process superiority and the ramping profitability of a foundry business persist, but are ever more challenging to envision,” Stein said.

Roth/MKM: ‘Neutral with Lowered Price Target’

Desilva notes that while there is a healthy demand for client processors, Intel's higher costs and need for new products in the data center segment pose challenges. “We lower our price target from $35 to $25 and maintain our Neutral,” Desilva concluded.

Intel's dramatic restructuring and earnings miss have led to a flurry of downgrades and revised price targets from analysts. While the company's efforts to cut costs and streamline operations are seen as necessary steps, the path to recovery remains fraught with challenges.

Investors will be closely watching how Intel navigates these turbulent waters and whether its strategic actions can eventually turn the tide.

Read Also:

• Intel’s Stock Plummets After Earnings: What To Know