Intel Corporation, a US multinational corporation and California-based technology company, said its new 7-nanometer-based CPU was delayed by six months and hopes it won’t be ready until late 2022 or early 2023, sending its shares to the drop 10%
“Intel has been projecting a half year loaded since January, and that is developing with a strong Q2, but the Q3 guidance we found surprisingly weak, 8% below / below. Delays of 7 nanometers are negative for the narrative, but the willingness to outsource could be a decisive transition for the company, “said Morgan Stanley stock analyst Joseph Moore.
“We expected this quarter to be a positive catalyst, but we were wrong about it; While this guide is probably still conservative, conditions get even tougher from here. The company will enter CY21 with a substantial decrease in revenue year-over-year in the first part of the year, with a significant increase in fixed costs, as a result of the CPU shortage that helped prices, with a very high PC market. strong that created difficult comparisons throughout the year; we’ve been 13% below consensus for next year. “
The world’s largest semiconductor company said it identified a defect mode in its 7nm process that resulted in performance degradation and expects to see initial production shipments of its new 7-nanometer data center CPU design in the first half of 2023.
Intel forecasts third-quarter revenue to be around $ 18.2 billion in adjusted earnings of $ 1.10 per share and updated its 2020 annual revenue guidance to $ 75 billion. For the second quarter, Intel reported that its overall revenue and adjusted earnings were $ 19.73 billion and $ 1.23 per share.
Intel shares sank more than 10% on Thursday, after a 1.1% decline in the regular session to close at $ 60.40.
Intel Stock Forecast
Seventeen analysts forecast the 12-month average price at $ 63.25 with a high forecast of $ 82.00 and a low forecast of $ 45.00. The average price target represents a 2.79% increase from the last price of $ 61.54. Of those 17, eight analysts rated “Buy,” seven rated “Hold,” and two rated “Sell,” according to Tipranks.
Morgan Stanley’s price target is $ 61 in the base case, $ 73 in a bullish scenario and $ 39 in the worst case. Several other equity research analysts downgraded the outlook for its Intel shares on Friday. RBC stock analysts lowered their price target to $ 48 from $ 52. Goldman Sachs lowered its target price to $ 54 from $ 65 and downgraded the stock rating to ‘Sell’ from ‘Neutral’. Credit Suisse Group lowered its target price to $ 70 from $ 75.
We think it’s good to wait for now, as the 50-day moving average and the 100-200-day MACD oscillator indicate a slight downtrend.
Analyst view
“The main drivers of revenue are PCs and the data center, which we estimate flat and rising low in mid-teens, respectively, in 2020, generating minimal long-term revenue growth. We are reasonably optimistic on the long-term outlook for the Data Center Group, believing the business growth trajectory is in the HSD range, “said Morgan Stanley stock analyst Joseph Moore.
“Non-PC / server initiatives like memory are likely to continue to disappoint. Process node transitions take longer; The 10nm server has been delayed several times until the end of 2020. “
Upside and downside risks
The shared gain of the PC and the Zen server accelerates as the adoption of Zen accelerates; Intel’s competitive response at 10nm is less impressive than expected. The console cycle turns out to be stronger than expected, Morgan Stanley noted as upside risks for Intel.
Intel’s server CPUs for 2020 (Cooper Lake at 1H at 14nm and Ice Lake at 2H at 10nm) stifle AMD’s momentum and allow it to regain engagement. AMD loses graphics stake in NVIDIA The console cycle exceeds expectations, Morgan Stanley noted as downside risks.
This article was originally published on FX Empire
