Barclays Sees Intel (INTC) as Among Cheapest in Semiconductors and Lifts Rating to 'Overweight'

October 18, 2016 6:38 AM EDT
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Price: $36.77 -0.46%

Rating Summary:
    42 Buy, 20 Hold, 5 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 24 | Down: 17 | New: 14
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(Updated - October 18, 2016 10:09 AM EDT)

Barclays upgraded Intel (NASDAQ: INTC) from Equalweight to Overweight with a price target of $45. Intel is set to report Q3 results after the bell today, and analyst Blayne Curtis expects solid results from most U.S. semiconductor companies. Overall he thinks Intel will benefit from better PC trends, increasing diversification, and compelling relative valuation.

"We see mostly in-line to better results and guidance as the broader end markets have remained relatively stable since last earnings with the exception of PC and memory, which is trending better. Data from the PC OEM/IDM channel continues to track better through September and we are upgrading Intel to OW," said Curtis.

"With the SOX at 805, the concern is that many names are fully valued and that may be true for some names that ran on the dividend trade or M&A (TXN, MCHP, etc), but we still see value in names such as AVGO, CAVM, INTC, and MU. We are a little more cautious through earnings on AAPL levered names but China remains strong and should offset leaving a wide range of outcomes for Q4 guides," continued the analyst.

Discussing Intel, the analyst said, "Intel is poised to return to sustainable growth on the back of a better PC trends (down to ~50% of total revenue), double-digit server growth, and further diversification (Mobile, Memory, IoT, ALTR etc). One of the cheapest large cap names in our universe (7.5x CY17E EV/EBITDA, 2.7% div yield - see Figure 15) offering better value vs. TXN and better growth (and potential M&A risk) vs. QCOM."

For an analyst ratings summary and ratings history on Intel click here. For more ratings news on Intel click here.

Shares of Intel closed at $37.29 yesterday.

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