Analysts see potential upside for INTC

Intel today

$25.05 +1.73 (+7.42%)

(As of November 6, 2024 ET)

52 week range

$18.51

▼

$51.28

Dividend yield

2.00%

Price target

$30.12

Intel Corp NASDAQ:INTC has had a tough year, with the stock falling as much as 65% due to fervent competition and declining profits. However, the stock has consolidated in recent weeks and is even showing the first signs of recovery potential.

Santa Clara-based Intel, a semiconductor giant worth about $100 billion, has struggled with competitors like… NVIDIA Corp NASDAQ:NVDA And Advanced Micro Devices, Inc. NASDAQ:AMDwho have staked strong claims on a large portion of the market. However, Intel shares are up 25% from their September lows, and there are several reasons for investors' excitement. Let's jump in and take a look.

Intel's basic performance

On the fundamentals front, Intel's Q3 results were a welcome surprise. Although the company posted a larger-than-expected loss of $0.46 per share, revenue came in higher than expected. It also helped that Intel's guidance going forward was high, a forward-looking factor that will almost always help offset any shortfalls in the past quarter.

Intel leadership also struck a decidedly optimistic tone, with CEO Pat Gelsinger highlighting the company's $10 billion cost-cutting plan. In his call with analysts, he said: “Our third quarter results underscore the solid progress we are making compared to the plan we outlined last quarter to reduce costs, simplify our portfolio and improve organizational efficiency “We have achieved revenue above the midpoint of our forecast and are taking urgent action to position the company for sustainable value creation in the future.”

The stock rose nearly 10% following the report's release, and while it traded somewhat weak heading into the weekend, there were signs that bulls could be starting to take control.

Intel stock analyst updates

This view is supported by the fact that the Northland Securities team upgraded Intel to an outperform rating late last week. This was done on the basis that much of the worst-case scenario is now priced into the stock and the risk/reward profile is almost too attractive to miss.

Northland's updated price target of $28 targets a 20% upside from current levels and would see the stock trade at its highest level since the August decline. It's worth noting that while analysts at Truist Financial and Robert Baird are neutral, they also have price targets above the $23 at which Intel shares closed on Friday, suggesting the stock is currently heavily undervalued.

Possible concerns about investing in Intel

For all its cautious optimism, however, Intel clearly has a long way to go, and there are also a number of skeptics. Jefferies' Blayne Curtis emphasized that Intel's fourth-quarter growth relies heavily on the PC client segment, which is facing cooling needs.

Morgan Stanley's Joseph Moore also warned that Intel's foundry ambitions pose risks, including challenges in its upcoming processes. Intel's medium-term prospects will depend heavily on how the broader market behaves. For the more risk-averse investor, it might be worth waiting until mid-November to make a move, as market direction could become clearer following several key tech earnings reports, not to mention tomorrow's US election.

Get involved with Intel

However, for those of us on the edge of risk-taking, this could be a golden opportunity to get started. After a difficult year, the company's fundamentals are showing signs of life and the shares are on a cautious upward trend.

The technical setup contributes to the optimistic outlook here. Intel's Relative Strength Index (RSI), a momentum indicator that measures overbought or oversold conditions, is at 55, suggesting there is still plenty of room for further gains before anyone can call the stock overbought. That would be a nice problem for long-suffering Intel investors, but one they'll have to deal with soon.

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