Intel heads into the red on 'uncertain' sentiment for the rest of the year
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As Intel (NASDAQ:INTC) saw its shares fall as much as 6%, Friday, as Wall Street analysts said the semiconductor giant has reached a position where it is dependent upon business getting back on track in the second half of this year.
Intel (INTC) shares gave up more than 4% one day after the company forecasted second-quarter revenue to come in slightly below analysts' estimates, and suggested that weakness in the PC market may be on the horizon. Chief Executive Pat Gelsinger said Thursday that the ongoing supply chain issues that have weighed on the chip sector for more than a year will still take some time to iron out.
While Intel's (INTC) first-quarter results were generally positive, the company said revenue from its client computing group [CCG], which is responsible for chips used in personal computers, fell 13% from a year ago, to $9.3 billion. Oppenheimer analyst Rick Schafer said that Intel's (INTC) comments about the PC market can't help but cast a crooked eye on the company's outlook for the rest of 2022.
"We see CCG growth challenged this year, as PC units slip," said Schafer, who added that the company's market share and outlook on pricing "remains uncertain." Schafer holds a perform, or neutral rating, but no price target on Intel's (INTC) stock.
While Intel's (INTC) second-quarter outlook left something to be desired in the minds of investors, the company stuck to its full-year forecast for a profit of $3.60 a share, on $76 billion in revenue.
At BMO Capital Markets, analyst Ambrish Srivastava left his market perform, or neutral, rating and $50-a-share price target on Intel (INTC) in place. Srivastava said that by keeping its expectations for all of 2022 unchanged, Intel (INTC) is "baking in a strong second half" ramp up in its business.
Chris Caso, of Raymond James, echoed some of Srivastava's comments, even to the point of maintaining his market perform rating on Intel's (INTC) stock. However, Caso said that by putting so much reliance on the second half of this year, and saying that it expects to see some weakness in the PC market, Intel (INTC) shouldn't be surprised if investors remain skeptical about the company's prospects for the foreseeable future.
"We also don't expect that anyone who owns Intel owns the stock for 2022, anyhow," Caso said. "We think the [positive case] is entirely about Intel catching up in 2024 and 2025."
Intel (INTC) also said it remains on track to spin off its Mobileye self-driving technology business unit in an IPO later this year.