Intel Corporation (NASDAQ:INTC) has received a pair of price target increases and a trio of positive earnings reports as its earnings preannouncement last week showed improving trends. Morgan Stanley analysts remain bearish on Intel but raised their price target, while a bullish JPMorgan analyst also raised his price target. Credit Suisse also weighed in on the chip makers preannouncement.

Intel

Intel surprises with better-than-expected results

Morgan Stanley analyst Joseph Moore and team reiterated their Underweight rating but increased their price target for Intel from $31 to $34 per share. They note that the preannouncement on Friday indicated the best sequential growth in nine years but add that channel replenishment was one of the drivers of that growth. As a result, they don’t believe it would be a good idea to buy Intel shares on the strong performance.

They explain that the strength is not actually indicative of end demand but rather inventory build across ODMs, OEMs and distributors. They don’t believe the strength will continue into the fourth quarter and thus are expecting a “slight decline.” However, they also said the better than seasonal strength in the third quarter does provide a resolution for their concern about excess inventory on the chip maker’s balance sheet.

Intel revises guidance upward

On Friday, Intel revised its third quarter guidance upward, with management now expecting September quarter revenue of around $15.6 billion, representing a 15% sequential increase and 8% year over year increase. The new outlook is 5% higher than the previous guidance for $14.9 billion, as Intel replenished its PC supply chain inventory. Intel also increased its outlook for gross margin to 63%, an increase of 100 basis points. It also guided for a $100 million increase in operating expenditures, bringing it to $5.2 billion for the third quarter.

In addition to the inventory replenishment, Intel also expects its data center business to post strong results. The Morgan Stanley team one very important thing to keep check will be just how strong Intel’s data center business was during the third quarter. Although the data center segment didn’t drive the upside to revenue, Intel management has remained confident that double-digit growth would resume in the quarter.

JPMorgan raises Intel price target

JPMorgan analyst Harlan Sur is at the opposite end of the spectrum with an Overweight rating on Intel. He raised his target from $42 to $44 per share, citing improving demand trends in laptops, gaming PCs and the U.S. as being an additional driver of the upside in the third quarter (on top of the supply chain refill).

He is especially bullish on the chip maker’s data center business, as he expects double-digit growth from it with upgrades in 25G networking products driving the growth. He also expects demand among enterprise customers to continue improving and believes Intel will benefit from the refresh of the Broadwell servers.

More praise for Intel’s data center business

Credit Suisse analyst John Pitzer did not adjust his price target, leaving it at $40 while maintaining his Outperform rating. Like Sur, he expects strength in Intel’s data center business but added that the chip maker should benefit from its share of Apple’s iPhone 7 modem business, in addition to improving prices for memory and what he views as a “cheap” valuation.

Despite the improved outlook, shares of Intel slumped on Monday, declining as much as 1.37% to $37.16.

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