Intel’s ‘unforgivable’ gains show it can’t predict its own results, analyst says

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After releasing its earnings report for the second quarter of fiscal 2022 earlier this week, chipmaker Intel Corporation has been the subject of some harsh analyst reporting from a host of Wall Street firms. Intel’s latest earnings saw the company’s revenue and net income decline 22% and 109% annually, respectively, with management attributing the low revenues to the current economic downturn and the net loss to high capital expenditures as it looks to retain leadership on regain the field of chip manufacturing process technology and establish itself on a solid foundation in the contract chip manufacturing industry.

After the gains, Wall Street analysts almost unanimously lowered Intel’s price targets and made comments with a variety of criticisms. One came from Northland, who was surprised at Intel’s apparent unpreparedness for the disappointing earnings report

Intel should have announced second quarter results, says Northland analyst

At least seven Wall Street analysts reporting on the semiconductor industry lowered Intel’s stock price the day after its Q2 2022 earnings report was released. The lowest of these came from Rosenblatt, who slashed its price target by $10 to $30, calling the gains an “outright disaster” and also questioning why the results hadn’t been announced in advance. The analyst also warned that Intel’s data center market will suffer in the coming years.

The second-lowest price target came from research firm Susquehanna, which cut it from $40 to $33, stating that despite the desire to believe the earnings report was a one-time event, there are lingering issues with Intel’s business model that deserve years of caution. . These include the growing popularity of ARM-based data center processors, AMD’s meteoric rise in the personal computing space and heavy capital expenditures that will continue to dent net revenues amid the risks of recession in the personal computing market.

A breakdown of Intel’s revenue and operating income for the second quarter of 2022 (Q2 2022). Image: Intel Corporation

Northland analyst Gus Richard has the highest price target for the company in our sample today, as he cut it from a previous $62 to a more modest $55. In his comments, however, Richard took a closer look at the company as he stated that the earnings report was unforgivable. The analyst added that the unforgivable earnings report casts doubt on the company’s ability to handle its investor relations and shows that Intel may not be able to predict its results in advance because it had not announced earnings in advance.

However, Richard maintained a moderate tone of optimism for the company as he said he expects Q2 and Q3 to be the worst for Intel and that the results are not surprising given the historic turnaround the company is trying to make.

Jefferies joined the chorus, which set out a baseline scenario where Intel would lose market share to both NVIDIA and AMD in the PC, server and data center markets. For the positives, the research firm noted that a fabled model, the execution of process technology and a possible wrong execution of AMD can breathe new life into the company. In the long run, Jefferies outlined that the growing shift to Arm poses a significant threat to Intel, and that, in his opinion, the best long-term strategy for Intel will be to switch to a fabled model through a joint venture with Taiwan Semiconductor Manufacturing. Company (TSMC). In such a scenario, Intel would be best suited to split capital expenditures with the US government and TSMC, and to offer joint foundry services.

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