Kaufman Bros. Initiates Coverage on Intel (INTC) with a Buy
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Kaufman Bros. initiates coverage on Intel Corp (Nasdaq: INTC) with a Buy. Price target $25.
Kaufman analyst says, "Intel is the dominant vendor of PC microprocessors, with an estimated 80.6% share in 2Q09 according to research firm iSuppli, versus number two competitor Advanced Micro Devices' share of 11.5%. With our firm-wide checks indicating enterprise PC demand in the stages of a recovery, coupled with indications that Intel's new notebook and server products continue to ramp well, we see INTC well positioned to grow revenues and expand margins in the process. We now believe PC units will come in essentially flat Y/Y in 2009, with notebook and netbook growth offsetting weakness in desktops and servers. Our 2009 Intel revenue estimate of an 8% Y/Y decline reflects weaker pricing and a mix shift to the lower end. As we look ahead to 2010, we expect INTC to benefit from a strong replacement cycle with its new platform launches, including the Thurley platform for servers and Montevina/Calpella platforms for notebooks. While macroeconomic uncertainty remains, we believe the PC industry units will come in flattish in 2009 and normalize to more than +10% Y/Y in 2010, and have modeled INTC revenues to recover accordingly (+12% Y/Y in 2010)."
Looking ahead, we believe INTC is effectively targeting increasing segmentation in the PC space, particularly notebooks by seeding emerging form factor opportunities such as the netbook, ultra-thin notebook and mobile Internet devices (MID) opportunities. Into 2H09, we expect INTC to bring ultra-low voltage technology to all segments of the notebook market, enabling thinner OEM products across low- and high-end segments and driving another replacement cycle. For the netbook segment, INTC is focused on reducing bill-of-materials costs by integrating functionality and transition from the current 3-chip solution to a more efficient 2-chip solution. We believe all of these efforts in aggregate will continue to support growth in the notebook portion of the PC market and for INTC."
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