© Reuters. ‘We hate this call but think it’s the right one’: Bernstein upgrades Intel (INTC)
By Senad Karaahmetovic
Bernstein analysts upgraded Intel (NASDAQ:) stock to Market-Perform from Underperform with a price target of $30 per share (from $20).
The analysts “finally” see an improving medium-term setup for shares despite things still looking “bad.”
“We have been decidedly negative on Intel’s prospects for quite some time, a stance clearly justified by the company’s utter collapse as a weakening market and poor decisions shaved billions off the top line, burned billions in cash, and crashed the stock price by almost 50% since CEO Pat Gelsinger arrived,” they explain in a note.
Moreover, the last week’s update signals that Intel’s roadmap “is not getting worse.”
“The company has gone through the wringer, but the stock is no longer going down on a (tremendous amount) of bad news suggesting investors are more prepared to work with it, and coming to the conclusion that after years of pressure things are, at least, unlikely to get worse.”
Estimates look “low enough to stand” as the bottom may be in. Bernstein is now above the Street on revenue “for the first time in a while.”
“Don’t get us wrong; things still look ugly here. But it’s hard to argue that it’s a secret, and while “cheap” is a nebulous term for a company with no earnings or FCF the stock isn’t really trading on those anymore, and isn’t that far off of book value (far below where it used to trade). We wouldn’t want to own it, but can make the argument that downside could be more limited at least into the back half,” the analysts concluded.
As far as AMD (NASDAQ:) is concerned, the analysts urged clients to take some profits after a run-up in shares and also sees the case for “a tactical pair trade,” i.e. long Intel, short AMD into year-end.
Intel shares are up about 0.5% in premarket Monday.
