Jefferies Equity Research analysts Mark Lipacis, Sundeep Bajikar and Delos Elder reiterate a Buy rating for Intel Corporation (NASDAQ:INTC) as they note some key takeaways from their investor meeting in New York.

Intel

We hosted Intel Corporation (NASDAQ:INTC)’s President and Investor Relations Director for investor meetings in New York this week, and also spoke with management from its Technology Management Group. We left meetings with increased conviction in our view that the company was on track to take share in the tablet market, and reduce OpEx and CapEx spending over the next several years. Reiterate Buy.

Management Meetings

We hosted Intel President Renee James and Investor Relations Director Mark Henninger for investor meetings in New York this week. We also spoke with management from its Technology Management Group, William Holt and Mark Bohr.

Increased Conviction in Tablet Share Gain Potential

We like Intel’s strategy of going after the low end in tablets first and then disrupting from the bottom up. Management indicated that it had line-of-sight visibility into 40 million units of tablet MPU shipments this year through design wins, but did not yet have the orders.

Altera On Track

The company reiterated that the Altera Corporation (NASDAQ:ALTR) transition was going smoothly, even if it was learning a lot about being a foundry.

Intel’s OpEx

Renee James indicated that the company was in a massive spending cycle in Tablets and Handsets, but that it was committed to ultimately returning to its target of 30% OpEx. She noted a number of R&D efficiency programs the company was currently running.

CapEx

Management noted that it should finish with spending on the bricks and mortar portion of its 450mm development facility in 2014, which we estimate should free up $1.5 billion in CapEx in 2015.

Low Power, Low Cost Broadwell

Management from Intel Corporation (NASDAQ:INTC)’s Technology Management Group indicated that its 22nm manufacturing process was a “half step” to low power / low cost MPUs, and that 14nm chips which should ship this year would be a “full step.” We thought it also interesting that management indicated that Broadwell would also embrace the low power architecture, which leads us to believe that Intel could surprise on the upside on its cost structure this year.

Valuation/Risks

Our $32 PT assumes a 15x multiple on our 2014 GAAP EPS forecast of $2.12, a discount to the S&P 500 multiple and below the 14% historical market premium. Downside risks are continued tablet cannibalization of x86-based PCs, and a higher mix of lower-priced PCs and misexecution on new products. Upside risk is from better execution in low-power products.