Northland maintains Intel stock Outperform rating, $28 target

On Tuesday, Northland analysts maintained their Outperform rating and $28.00 price target for Intel Corporation (NASDAQ:INTC) shares, which currently trade at $21.91 and have surged nearly 12% in the past week. The analysts predict that the results will be better than expected, although not exceptional. According to InvestingPro data, Intel's upcoming earnings report is due in 9 days, with analysts' price targets ranging from $19 to $31.

Northland's commentary highlighted that despite low expectations for Intel's first-quarter guidance, any miss in the forecast is unlikely to significantly affect the stock. They project that Intel will either meet or surpass fourth-quarter consensus estimates, with potential gross margin benefits from the $3 billion impairment and accelerated depreciation charges recognized in the third quarter. InvestingPro's analysis shows Intel's current gross profit margin stands at 40.07%, with the company's overall financial health rated as 'FAIR'.

Intel shares experienced an uptick last week due to speculation about a potential acquisition. The analyst noted that while Intel's combined assets might surpass its market capitalization, any deal involving Intel's foundry would probably need government support. Additionally, the analysts suggested that the appointment of a new CEO could serve as a positive catalyst for the company.

Looking ahead, Northland anticipates that Intel's first-quarter guidance will fall below consensus due to ongoing weakness in the Data Center and AI Group (DCAI) and a weaker-than-usual seasonality in PC client sales. They expect first-quarter revenue guidance to range between $11.75 billion and $12.75 billion, with a midpoint of $12.25 billion—this would represent an 11% quarter-over-quarter decline and stand $675 million below consensus.

The analysts also provided insights into the competitive landscape, noting that Intel's 18A process technology is equivalent to TSMC's 3N, which they find disappointing as it leaves Intel a generation behind TSMC. They pointed out that Apple (NASDAQ:AAPL)'s decision to stick with TSMC's 3N and not move to 2N in the calendar year 2025 could benefit AMD (NASDAQ:AMD), as it would likely keep AMD ahead in client CPU technology through 2026. As Intel decreases its outsourcing to TSMC and increases its internal production of 18A, this could release additional TSMC capacity for AMD, potentially impacting Intel's market share and gross margin. For deeper insights into Intel's competitive position and comprehensive analysis, including 12+ additional ProTips and detailed financial metrics, check out the full Intel Research Report on InvestingPro.

In other recent news, Intel Corporation has been making significant strides in its strategic partnerships and investments. The company's collaboration with United Microelectronics Corporation (UMC) on a pilot production line in Arizona is progressing smoothly, with UMC currently verifying silicon performance, a crucial step before full-scale production begins.

Intel is also maintaining its substantial investment in Ohio, with construction of its new manufacturing complex, known as the Silicon Heartland, moving forward after initial delays. The project is part of the company's IDM 2.0 strategy and is expected to bolster its manufacturing capabilities amidst a global push for semiconductor self-sufficiency.

Analysts from Deutsche Bank (ETR:DBKGn) and UBS have reiterated a Hold rating on Intel's stock, indicating potential cyclical and secular challenges ahead. Despite these challenges, Intel's revenue growth outlook is modest, projecting an increase of 3-5% for the year.

Intel has also announced its intention to spin off its venture capital arm, Intel Capital, into an independent fund. This strategic move is part of Intel's broader strategy to optimize asset value and improve business focus and efficiency.

Lastly, there has been speculation about Intel potentially being an acquisition target, stirring investor interest in the company. These are among the recent developments that are shaping Intel's strategic direction and operational efficiency.

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