Intel Corporation (NASDAQ:INTC) stock is already one of the most widely held positions on Wall Street, but that didn’t stop top research firms RBC Capital Markets and Wedbush Securities from increasing their INTC stock price targets today.
The bullish revisions came on the heels of a better-than-expected full-year revenue outlook for the Santa Clara, California-based chipmaker.
Many investors, myself included, were skeptical of Intel’s resiliency in the face of slumping PC sales heading into yesterday’s earnings report, and INTC stock was already down 13% in 2015 as it headed into yesterday’s earnings announcement.
What INTC announced on Tuesday afternoon now has Wall Street pros — and individual investors like myself — reconsidering their pessimism.
Q1: Nothing to Write Home About
Before you start to think that Intel posted a blowout first-quarter, let’s get something straight. Q1 results were nothing to brag about. In fact, while the INTC earnings per share, at 41 cents, were in line with Wall Street expectations, revenue was not. Intel’s $12.8 billion in sales clocked in just below consensus estimates for $12.9 billion, wrapping up an utterly ho-hum quarter.
Granted, INTC told investors about a month ago that revenue was shaping out to be about, oh, $1 billion worse than it previously expected in the first quarter, so it’s not too surprising that number fell short yesterday.
What is surprising, and what initially began sending INTC stock higher in after-hours trading on Tuesday, is the company’s optimistic full-year revenue outlook. Consensus estimates called for $55.69 billion in fiscal 2015; Intel now sees revenue of $55.9 billion this year.
Analysts, ignoring the yawn-inducing first-quarter numbers, honed in on the bullish guidance and several other factors as they upgraded the stock and upped their INTC stock price targets.
RBC Capital Markets raised its price target on Intel stock from $38 to $40 per share, implying upside potential of 27% from the INTC stock price at yesterday’s close. RBC also upgraded Intel shares to “outperform” from “sector perform,” and cited growth in its data centers — revenue in that segment rose 19% in the first quarter — as a potential catalyst for the INTC stock price going forward.
Wedbush Securities boosted its price target for Intel stock from $34 per share to $37 per share, also raising its rating on shares to “outperform.” The current price target implies a 17% upside from yesterday’s closing price. Central to Wedbush’s thesis is the idea that the struggling PC market has bottomed; Intel boasts an incredible 85% market share in PCs, where the only other chipmaker with any meaningful share is the unprofitable Advanced Micro Devices, Inc. (NASDAQ:AMD).
So, assuming RBC and Wedbush are on to something and the PC market has bottomed and INTC has promising new avenues for revenue growth, $40 per share might not be too far off.
As of this writing John Divine held no positions in any of the stocks mentioned. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
