On Tuesday, HSBC revised its outlook on Intel Corporation (NASDAQ:INTC), reducing the stock's price target from $44.00 to $37.00, while keeping a Hold rating on the stock. The adjustment comes as HSBC analysts recalibrate their expectations for the tech giant's financial performance, taking into account Intel's recent announcement regarding changes to its financial reporting framework.
The firm has reduced its earnings per share (EPS) estimates for Intel for fiscal years 2024 and 2025. The new forecasts stand at $1.24 and $2.14 respectively, marking a decrease of 4% and 12%. These figures fall below the consensus forecasts, which anticipate EPS of $1.37 and $2.22 for the same periods. According to HSBC, the revised estimates primarily factor in the anticipated underperformance of Intel's Foundry and datacentre operations.
The reduction in the price target to $37 is based on a forward-year 2024 estimated price-to-book (PB) ratio of 1.5 times, a decrease from the previously expected 1.8 times. The maintenance of the Hold rating suggests that HSBC does not foresee significant positive or negative changes in the stock's near-term performance.
HSBC's analysis indicates that while there may be improvements in Intel's client business, these are not expected to sufficiently counterbalance the projected weakness in the Foundry, datacentre, and artificial intelligence (AI) segments. Nevertheless, the firm acknowledges that a stronger recovery in the traditional non-AI server market could potentially act as a positive driver for Intel's stock in the future.
InvestingPro Insights
Following the HSBC outlook revision on Intel Corporation (NASDAQ:INTC), a glimpse into the real-time data and InvestingPro Tips reveals additional layers to the semiconductor giant's financial landscape. InvestingPro data shows a market cap of $146.48 billion and a trailing twelve months revenue of $54.23 billion, with a notable revenue decline of 14.0% as of Q4 2023. Despite this, Intel's gross profit margin remains solid at 40.04%, reflecting its ability to maintain profitability in challenging conditions.
From an investment standpoint, Intel's stock appears to be trading at a high earnings multiple, with a P/E ratio of 91.58 as of the last twelve months of Q4 2023, which could signal a premium valuation compared to industry peers. Moreover, the stock is currently in oversold territory according to the RSI, hinting at potential buying opportunities for investors. The InvestingPro Tips also highlight Intel's long-standing commitment to dividends, having maintained payments for 33 consecutive years, which may appeal to income-focused investors.
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