Cowen and Company is positive on Intel's (Nasdaq: INTC) FY16 outlook, but also believes the stock is fairly valued at this point. The firm reiterated its Market Perform rating, but lifted its price target from $34 up to $35 following the company's update.

Analyst Timothy Arcuri noted the Intel is now less-dependent on PCs, while mobile losses are continuing to improve. The analyst said: While the PC business has been challenging, the fact remains that INTC as a whole is less reliant on PCs than in the past and its PC business is still very profitable. Further, MPU units should grow in ’16, even in another flat to down PC market on channel re-stock. In mobile, MCG losses are set to improve by >$800MM in ’15 and another $800M in ‘16 (nearly spot in line w/our thinking). Our checks indicate that while 7360 has been certified at AT&T, there is no sign of engagement with Sprint. We doubt that AAPL wants to go back to separate SKUs for legacy CDMA carriers so we think that it is less likely that AAPL will select an INTC modem for the upcoming 6c. In DCG, INTC is now back on track to its ~15% CAGR model and sees this business growing mid-teens in ’16, above what many investors feared ahead of Analyst Day. Lastly, while still small relative to PCG/DCG, memory is clearly becoming an integral part of the narrative, and we think MU’s relationship w/ INTC remains severely underappreciated.

Arcuri is also adjusting estimates on Intel: FY16 from $2.55 to $2.47 and FY17 from $2.59 to $2.63. The analyst notes better growth prospects in "DCG and GM tailwinds from the insertion of an extra tock (Kaby Lake) that gives longer runway for yield-optimized 14nm."

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