Intel’s ‘inexcusable’ earnings show it can’t predict its own results, analyst says

This is not investment advice. The author has no position in any of the stocks mentioned. has a disclosure and ethics policy.

After releasing its second-quarter fiscal 2022 earnings report earlier this week, chipmaker Intel Corporation is receiving hard-hitting analyst coverage from a host of companies. of Wall Street. Intel’s latest results saw the company’s revenue and net profit fall 22% and 109% respectively, with its management attributing the weak revenue to the current economic downturn and the net loss to business expenses. high investment as it seeks to regain technological leadership in chip manufacturing processes. and establish a solid footing in the contract chip manufacturing industry.

After the earnings, Wall Street analysts almost unanimously downgraded Intel’s stock price targets and released notes containing various criticisms. One came from Northland, which expressed surprise at Intel’s apparent unpreparedness for the disappointing earnings report.

Intel should have announced second quarter results in advance, says Northland analyst

At least seven Wall Street analysts which cover the semiconductor industry cut Intel’s share price the day after the second quarter 2022 earnings report was released. The lowest of those came from Rosenblatt, which slashed its $10-$30 price target, called the earnings “an absolute disaster” and also questioned why the results weren’t announced ahead of time. The analyst also warned that Intel’s data center market will suffer for years.

The second-lowest price target came from research firm Susquehanna, which cut it to $33 from $40 and said that despite wanting to believe the earnings report was a one-time event, there are lingering issues with Intel’s business model that are worth watching out for for years. come. These include the growing popularity of Arm-based data center processors, AMD’s rapid rise in the personal computing space, and heavy capital spending that will continue to reduce bottom line revenue amid risks of recession which contract the personal computing market.

A breakdown of Intel’s revenue and operating profit for the second quarter of 2022 (Q2 2022). Image: Intel Corporation

Northland analyst Gus Richard has the highest price target for the company in our sample today, as he cut it from a previous $62 to a more modest $55. However, in his comments, Richard took the company to task, saying the earnings report was inexcusable. The analyst added that the unforgivable earnings report calls into question the company’s ability to manage its investor relations and shows that Intel may not have the ability to predict its results in advance. since it did not announce the profits in advance.

However, Richard maintained a tone of moderate optimism for the company, as he said he expects the second and third quarters to be the worst for Intel and that the results will not be surprising given the historic turnaround that the company is attempting.

Jefferies joined the chorus, which established a baseline scenario that Intel would lose market share to NVIDIA and AMD in the PC, server and data center markets. For benefits, the research firm noted that a fabless model, process technology execution, and potential poor AMD execution can breathe new life into the company. In the long term, Jefferies pointed out that the growing move to Arm is a significant threat to Intel, and that in his view, the best long-term strategy for Intel will be to move to a fabless model through a joint venture with Taiwan. Semiconductor Manufacturing. Company (TSMC). In such a scenario, Intel would be in the best position to share capital expenditures with the US government and TSMC, as well as offer joint foundry services.


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