Intel Corporation (NASDAQ:INTC)'s price target has been raised by a report from Jefferies, from $24 to $27, expecting a potential upside in the second half of the year. The report based their judgment on the following points.
Microsoft Corporation (NASDAQ:MSFT) is getting more aggressive in pricing of Windows 8 and Office.
- The new and improved offering from chip maker, Clover Trail and Bay Trail, are gaining popularity.
- Intel's Clover Trail was used in Samsung Galaxy Tab 3, which reduces the chip maker’s dependence on windows platform.
The report believes that Intel Corporation (NASDAQ:INTC) will be a leading semiconductor manufacturing process in 3-to-5 years helping the chip maker to become a leading supplier of handset MPU's. Earlier, Intel Corporation (NASDAQ:INTC) and Microsoft Corporation (NASDAQ:MSFT) believed that PC market is price inelastic. This helped other platforms (ARM + IOS or Android) to take advantage in the faster growing lower end segment. However, this is changing now, and both companies are now refocusing on growth segment.
The recent Computex helped the analyst to confirm on two points. First, Intel's ATOM-based Clover Trail is gaining popularity in tablet like devices, and its Bay Trail processors will be a good fit for Notebooks and convertibles, primarily due to their enhanced battery life. Second, the software giant Microsoft Corporation (NASDAQ:MSFT) is offering big discount, as much as 70 percent, on a combined package of Windows 8 and Office for devices with sub-11 inch screens. The report believes this could help the company to boost the growth.
Intel chips were used in the Samsung's Android-driven Galaxy Tab 3, as per the report this fact reflects that, in the long term Intel Corporation (NASDAQ:INTC) will “be one of the leading suppliers of MPU's into mobile computing form factors.”
The price target from Jefferies is based on the following conditions:
- PC MPU and server MPU grow by 3 percent in 2013.
- Intel’s Haswell, Clovertrail, Baytrail and Merrifield products are available as per the schedule.
An upside to price target is also possible if:
- The lower priced Windows 8, and new –improved chips from Intel Corporation (NASDAQ:INTC) that enhances battery life, lift the sales of Intel Corporation (NASDAQ:INTC) Platform more than expected.
- Smartphones and tablets are made available through multiple OEM's.
- In 2013 and 2014, PC MPU grows by 8 percent or more.