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Investing.com -- Bank of America upgraded Intel (NASDAQ:INTC) to Neutral from Underperform following the appointment of Lip-Bu Tan as CEO, citing his “solid track record” and potential to drive a turnaround.
“We really like the new CEO appointment,” BofA analysts wrote, raising their price objective to $25 from $19.
Tan, who previously led Cadence Design (NASDAQ:CDNS) Systems, oversaw a “32x stock appreciation versus SOX 16x,” BofA noted.
His familiarity with Intel, having served on its board, and “breadth of relationships and investments across the US/Asian semi-industry landscape” as Chairman of Walden International were also highlighted as positives.
While BofA sees “a greater opportunity to restructure/turn things around under his leadership,” they caution that Intel still faces challenges.
“The upside potential, however, is balanced against risks from a lack of AI roadmap and increasing competition from ARM-based PC and server CPU rivals.”
The report suggests improving market conditions could facilitate Intel’s divestiture of its Altera and automotive assets, helping to “delever the balance sheet.”
Meanwhile, BofA says Tan’s background in electronic design automation (EDA) could strengthen Intel’s partnerships with Cadence and Synopsys (NASDAQ:SNPS), which have “been under pressure due to uncertainty at this large customer.”
BofA also flagged reports of a possible joint venture between Intel’s foundry division and TSMC, engaging “fabless companies such as Nvidia (NASDAQ:NVDA), AMD (NASDAQ:AMD), Broadcom (NASDAQ:AVGO), and Qualcomm (NASDAQ:QCOM).”
While no confirmation has emerged, analysts noted that such a deal “could aid INTC’s potential turnaround efforts under the incoming new CEO.”
Ultimately, while the company’s transformation “remains a work in progress,” BofA sees potential for improvement under Tan’s leadership, though execution will be key.