Cowen Nudges PT on Intel (INTC) Up to $38; Near-Term Bear Case on PCG 'Lost Bite'

Cowen and Company affirms Intel (Nasdaq: INTC) at Market Perform, but moves its price target from $36 to $38, following Q4 results and outlook issued Thursday night.

Analyst Timothy Arcuri summarized: With an in-line CQ4 despite materially under-shipping the PC market and seasonal CQ1 guide, the bear case around a PC-related miss has lost some bite. 10nm foundry, improving MCG losses and stellar DCG growth create a good narrative as well. That said, we still fail to see >$3.40 LT EPS power which assumes a lot goes right.

Moving forward: Near-term, the bear case around a PCG miss has lost much of its bite as INTC made CQ4 despite obviously burning a good bit of channel inventory. From here, it should grow more in-line w/PC mkt - not great, but removes a key fear among bears. Additionally, there is still no reason to believe DCG mo' will slow and MCG losses are set to come down which will help fuel the narrative that things are "getting better". Lastly, the willingness of big volume chipmakers like QCOM/AAPL to whip biz around at 14nm more than at prior nodes creates fertile ground for an improving foundry narrative as it rolls out 10nm in late '15 (albeit we think still limited if INTC remains unwilling to release its design kits for fear of relegating its leading edge process lead). Overall though, we still can't see LT EPS power much better than $3.40 (writing MCG losses to zero (hardly a slam-dunk), and -2% and 13% LT growth for PCG and DCG respectively). In our view, this implies a $44 stock at best and a lot has to go right.

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

Intel closed at $36.19 yesterday.

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