Key Takeaways
- Shares of Intel recently traded at their highest levels this month.
- Investors responded positively to Monday night’s turnaround update from Intel CEO Pat Gelsinger.
- Some Wall Street analysts, however, remained cautious, reiterating recent ratings and price targets on the shares.
There are signs of hope among Intel (INTC) investors.
Shares of the chipmaker rose Tuesday, lifted by Monday evening’s update on Chief Executive Officer (CEO) Pat Gelsinger’s plans to re-energize the company and reinvigorate the beleaguered stock. The stock, up nearly 5% intraday, was eating into year-to-date losses that have cut its value roughly in half, trading at the highest levels this month.
Monday night’s announcement—it included updates on plans for cost-cutting, fundraising, and strategy—sent the stock higher in after-hours trading. That continued Tuesday. Still, some Wall Street analysts communicated cautious optimism at best.
Several Intel Price Targets Unchanged
Both Bank of America and Deutsche Bank analysts, for example, reiterated their ratings while keeping their price targets unchanged. Bank of America has an “underperform” rating and a $21 price target, while Deutsche Bank has a “hold” rating and a $27 target. (The mean analyst target is a bit below $27, according to Visible Alpha data, while it’s trading a bit below $22 in early-afternoon trading Tuesday.)
Wall Street’s caution may be due in part to the notion that Monday’s announcement indicates that some of the more aggressive mergers and acquisitions (M&A) options for Intel recently receiving media coverage could be off the table for a while, leaving the outlook for the stock mainly in the company’s ability to improve its operations.
“We believe Intel’s transformation efforts are heading in the right direction and today’s announcements should be positively received,” Deutsche Bank wrote Monday. “However, the costs of this transformation process are likely to continue to weigh on the [company’s] financials for at least the next year, thereby limiting the positive [earnings per share]/free cash flow estimate revisions necessary to drive the shares higher.”