Intel Corporation (INTC) Expectations Low, Capabilities High: MKM

Intel Corporation (INTC) Expectations Low, Capabilities High: MKM
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Intel Corporation (NASDAQ:INTC), has been rated a buy by MKM partners. This rating, which is a reiteration of the previous rating, was accompanied by a 12-month price target of $24. It comes ahead of the chip maker’s earnings call slated for January 17th.

Intel Corporation (INTC) Expectations Low, Capabilities High: MKM

Through a report compiled and published by MKM partners, the research firm sums up its case on Intel in what it describes as high capabilities but low expectations. According to MKM partners, the current structural bear case – that Intel’s technology has outmatched market requirements- is pompous. The research firm contends that uses have always been found for advanced technologies. In light of Intel Corporation (NASDAQ:INTC)’s advanced technology, MKM partners expect a lower capex (capital expenditure) number in the near term, settling for a figure below $8 billion in 2013. This lower capex will create significant tailwinds for cash generation as well as the stock.

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In addition, MKM highlights Intel’s 4.2 percent dividend yield and its dominant share in the server space. Putting these factors into perspective and considering that the current investor sentiment is increasingly negative, MKM believes that the current levels present a good entry point for money.

Some of the primary issues pinpointed by MKM includes the increased media speculation on Ultrabook delays. The Research firm expects Ultrabooks with Haswell (next generation PC) to be available in the summer and is convinced that more stringent requirements will be instrumental in streamlining the offering. MKM also expects Intel to carry on with its pursuit of foundry business, placing Apple Inc. (NASDAQ:AAPL) as an obvious target. The research firm however argues that this ‘Apple play’ will require a little additional capital investment

Focus on emerging market identified as good play

As we reported yesterday, Intel Corporation (NASDAQ:INTC) said, at the recent Las Vegas based Consumer Electronics Show, that it would target the huge opportunity in developing markets. In connection with this move, MKM is inclined to believe that the move will pan out and is in fact overly optimistic on emerging market demand for 2H12/2013.

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