Intel dips as analysts reveal Q3 revenue will be at low-end of range, question optimism
Justin Sullivan

Intel (NASDAQ:INTC) shares dipped on Thursday as several Wall Street analysts questioned the semiconductor company's optimism over its transition and near-term future.
Citi analyst Christopher Danely said in a research note that he had dinner with Intel (INTC) Chief Executive Pat Gelsinger and noted that despite Intel's (INTC) insistence it is "in line with expectations" on upcoming manufacturing nodes, evidence points to the company still having unresolved issues.
"Our checks indicate there is still some trouble achieving cost and margin targets," Danely wrote in a note to clients.
Citing those channel checks, Danely added that Intel's (INTC) yields for both 7 and 4 nanometer manufacturing nodes are "below plan."
Intel (INTC) shares fell almost 1% to $30.41 in early trading. 
In addition to worries over manufacturing issues, Danely noted that Intel (INTC) "lowered its guidance" for its third quarter. The company said that largely because of an inventory correction, it now expects sales to be at the low-end of the previous given range of $15B to $16B. In July, Intel (INTC) said it sees revenue to be far below the $18.67B analysts were expecting. Non-GAAP gross margins are expected to be 46.5%, with earnings of 35 cents a share. 
Danely reiterated his neutral rating on Intel's (INTC) stock, citing the likelihood of "additional downside" to consensus estimates due to weakening PC demand and the continued loss of market share to Advanced Micro Devices (AMD).
Separately, Deutsche Bank analyst Ross Seymore called the cut a "soft pre-announcement" and that it confirms recent comments made by other Intel (INTC) executives, including Sandra Rivera, who spoke at a recent Deutsche Bank conference. 
"Overall, [Intel's] incremental pessimism is not surprising," Seymore said in a research note. "And we are now even more dubious of the [company's] ability to achieve its full year [2022] guidance, which implied a lofty 'snapback' even before this pre-announcement."
Seymore lowered his revenue and earnings per share forecasts between 5% and 10% following the new disclosure, citing a "more tepid outlook in both PCs and Data Center." 
On Thursday, Stifel analyst Ruben Roy initiated his coverage on Intel (INTC) with a hold rating and a $32-a-share price target, noting that the company's timeline and technology roadmap are seen as "ambitious" amid its turnaround strategy. 
"As [Intel] begins its multi-year transition strategy, we view management's timeline and technology road map targets as ambitious, and we expect competitive pressures to continue to increase," Roy wrote in a note to clients. 
Roy added that Intel (INTC) shares have underperformed the Philadelphia Semiconductor Index and S&P 500 over the past six months, with shares down 38%, compared to a decline of 25% and 11% for the respective indices. 
Earlier this month, Bank of America listed Intel (INTC) as one of its new ideas in its Alpha Surprise screen quantitative portfolio strategy.