FBR Capital Maintains Bullish Views on Intel (INTC) Following 2Q Earnings Results

FBR Capital maintains an Outperform rating and $38.00 price target on Intel (NASDAQ: INTC) following 2Q15 results. INTC's reported revenue was $13.2B, above the Street's expectations which was lowered to ~$13.0B following AMD preannouncement.

Analyst Christopher Rolland commented, "On Wednesday evening, July 15, Intel announced better-than-expected 2Q15 results and 3Q15 guidance, primarily as PC channel inventories were drawn down more modestly than management’s original expectations. DCG was somewhat disappointing (we buy into the “lumpy” narrative) but likely better than feared given guidance from QLogic and others in the server supply chain. While well telegraphed, management also lowered capex another $1B as the company pushes out 10 nm until 2H17 and as management acknowledges an extension of Moore’s law from 24 months to 30 months. To arrive at the 61.5% full-year GM guidance, it implies a –300-bp drop-off in 4Q15 (to 60%). Furthermore, management provided limited details into the sudden and unexpected drop (higher mix of 14 nm, 10 nm start-up costs) and will not elaborate until the company’s investor day in November. Street analysts therefore have little insight into the expected GM rebound in 2016 and may start GMs from an artificially low point in 1Q16 (in the high 50s). We strongly suspect the company was overly conservative on gross margins in 4Q15, and therefore Street 2016 EPS may be understated (also, we expect analysts will be adding $0.07 of EPS for Altera, excluded from current Street models)."

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 $29.69 yesterday.

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