Fannie Mae, Freddie Mac shares tumble after conservatorship comments
On Friday, Mizuho (NYSE:MFG) Securities adjusted its outlook on Intel Corporation (NASDAQ:INTC) shares by reducing the price target from $23.00 to $22.00, while maintaining a Neutral rating on the stock. The stock currently trades at $21.49, having surged over 13% in the past week despite broader market challenges. According to InvestingPro analysis, Intel is currently trading near its Fair Value, with analysts’ targets ranging from $17.70 to $31.00. The adjustment follows the announcement from Intel’s new CEO, Lip-Bu Tan, regarding his near-term plan for the company. Tan’s strategy includes streamlining operations by cutting middle management bureaucracy, which falls slightly below investors’ expectations of a 20% reduction. The targeted operational expenses are now set at $17 billion for fiscal year 2025, a decrease from the previous estimate of $17.5 billion, and $16 billion for fiscal year 2026.
Tan also announced a $2 billion cut in capital expenditures, which may be influenced by potential delays in CHIPs funding. Additionally, he emphasized the company’s focus on delivering leading-edge technology and adhering to the product roadmap. However, Mizuho’s analyst pointed out several concerns including the potential delay of the 18A/Panther Lake to year-end, which was previously expected in the second half of 2025.
The analyst highlighted macroeconomic risks, indicating a downward guidance for the June quarter by 7% quarter over quarter, with the Data Center and AI Group (DCAI) performing worse than the Client Computing Group (CCG). These challenges are reflected in Intel’s financial metrics, with InvestingPro data showing revenue of $53.1 billion and negative free cash flow of $15.6 billion in the last twelve months. The company’s financial health score remains "FAIR," though cash burn has become a significant concern. Despite a satisfactory gross margin in the March quarter due to product mix, the forecast for the June quarter gross margin is down by 270 basis points quarter over quarter to 36.5%, influenced by headwinds in Lunar Lake and 18A startup costs.
Intel’s new CEO’s plan and the subsequent analysis by Mizuho Securities reflect the ongoing adjustments as the company navigates the current economic environment and invests in its future capabilities. While currently unprofitable, InvestingPro analysts predict a return to profitability this year. For deeper insights into Intel’s financial health, valuation metrics, and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers, covering over 1,400 top US stocks.
In other recent news, Intel Corporation reported its Q1 2025 earnings, exceeding expectations with an earnings per share (EPS) of $0.13, far surpassing the projected $0.0033. The company also reported revenue of $12.7 billion, which was higher than the anticipated $12.25 billion. Despite these positive results, Intel’s stock experienced a decline in aftermarket trading, which was attributed to broader market concerns and macroeconomic uncertainties. Additionally, Intel announced plans to sell a 51% stake in Altera to Silver Lake Partners, valuing Altera at nearly $9 billion, with the deal expected to close in the second half of 2025.
In terms of analyst activity, Deutsche Bank (ETR:DBKGn)’s Ross Seymore inquired about Intel’s strategy to balance its internal product roadmap with its foundry business. The company emphasized its commitment to ramping up its internal products like Panther Lake while building trust with foundry customers. Intel also provided guidance for Q2 2025, forecasting revenue between $11.2 billion and $12.4 billion, with a gross margin expectation of 36.5%. The company is preparing for potential economic challenges, including shifting trade policies and tariff impacts, which could affect its performance in the latter half of the year.
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