RBC Lifts PT on Intel (INTC) to $38; PCs Supply Chain, Demand Boost Q3 Expectations
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RBC Capital boosts its price target on Sector Perform-rated Intel (Nasdaq: INTC) from $36 to $38 following improved Q3 guidance issued earlier Friday.
Analyst Amit Daryanani commented today:
INTC updated their Sept-qtr guidance with revenues 5% above prior guidance and an EPS implication 10% above Street estimates. INTC cited a replenishment of PC supply chain inventory and some signs of improving PC demand as reasons for their stronger results. Given 1) INTC results, 2) stronger PC ODM data that has lasted through the summer, 3) WDC's positive pre-announcement, and 4) stronger PC supply chain checks, we believe that PC unit expectations may come in "less-bad" at down mid-single digits in 2016, slightly stronger than the high-single digit decline expectations prior.
Given INTC's new Sept-qtr guidance, our revenue/EPS estimates are adjusted to $15.6B/$0.73 vs. Street at $14.9B/$0.66. For FY16E, our estimates are adjusted to $59.2B/$2.67 vs. Street at $57.6B/$2.47, while our FY17E estimate are adjusted to $61.2B/$2.97 vs. Street at $59.7B/$2.71. Fundamentally, we think this positive pre-announcement is a good first step to the PC story stabilizing at INTC, which could help INTC grow total revenues, driven by tailwinds from DCG, IoT, and memory, the analyst noted.
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