Intel Corporation (NASDAQ:INTC) shares rose as much as 4 percent today after a report from Goldman Sachs analysts revealed that short interest in the stock seems to have fallen dramatically over the last 60 days.
Investors’ New View Of Intel
Analysts James Covello, James Schneider, Ph.D., Mark Delaney, CFA and Gabriela Borges issued a report today indicating that investors have apparently changed their view of Intel. They said before Intel Corporation (NASDAQ:INTC)’s March quarter report in April, there was a lot of short interest in the company.
However, two months later, they say short interest is “down quite a bit,” although it still remains fairly high. They said most people in favor of Intel make the case that there aren’t any negative catalysts in the near term, but they believe the actual view should be on the company’s gross margins in the second half of this year.
Possibilities For Intel’s Gross Margins
In their view, Intel Corporation (NASDAQ:INTC)’s gross margins will likely increase in the second quarter of this year because of the company’s “decision to increase factory loadings.” They believe the problem though is similar to one the component maker faced last year, which was that maxing out its factories for several consecutive quarters created a large amount of extra component inventory for a rapidly shrinking PC market.
So the analysts said the question now will be how long the company’s factories can run at max production rates because maxing out the factories is great for gross margins in the current quarter. However, they believe that Intel Corporation (NASDAQ:INTC) might have to negatively preannounce some of its results this year because of its aggressive guidance, which forecasts “well above seasonal growth.”
Goldman Maintains Sell Rating On Intel
As a result, the analysts said they are maintaining their sell rating on shares of Intel Corporation (NASDAQ:INTC) because of the falling short interest in the company and also how expensive its shares are.