Intel Corporation (NASDAQ:INTC)’s estimates have been lowered by Raymond James, amid subdued PC demand and increasing elasticity in consumer PCs.
Raymond James’ analyst Hans Mosesmann in his note to clients view the recent strength in Intel’s stock price as an attractive exit point and reiterated underperform rating on the stock.
The analyst doesn’t feel an Apple Inc. (NASDAQ:AAPL) foundry agreement and Android tablet win with Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) to provide meaningful drivers of results any time soon.
The analyst also expressed skepticism about Intel’s new microarchitecture Haswell. Hans Mosesmann feel the Street is missing the dynamic that Intel’s Haswell has an initial focus on higher-end products where Intel is already dominant and only subsequently it is replacing its legacy products.
Interestingly, Jefferies has recently raised the price target for Intel enthused by its Haswell product made available as per schedule.
Intel’s Mobile Revenue Yet To Make Meaningful Headway
Raymond James’ analyst feel Intel’s mobile ambitions have yet to yield design wins of any significance and its mobile revenue is yet to make any meaningful headway relative to PCs and data center. Hence the analyst feels Intel’s recent tablet win at Samsung (Galaxy Tab 3) is of some significance, though its financial impact would be immaterial.
Recently, Intel Corporation (NASDAQ:INTC) won a major victory in the mobile market, after Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) selected the chip-maker’s processor to power its new version of Android tablet.
Surprised By Intel’s Price Surge
Raymond James analyst notes Intel Corporation (NASDAQ:INTC)’s share price was up 10 percent in the second quarter, against 7 percent and 2 percent increases reported by SOX and S & P 500 respectively. The analyst is surprised at the price surge considering in an increasing interest rate environment, Intel’s 3.8 percent dividend becomes less attractive on a relative basis.
The analysts observes Intel’s shares are trading at 12.5 times NTM consensus earnings, which is higher than the post 2009 recovery average of 10.8x, as depicted in the following graph:
The analyst feels using their 2013 non-GAAP EPS estimates of $1.70, Intel Corporation (NASDAQ:INTC)’s shares are trading at about 14 times its earnings, above the recent averages.
Hence, Raymond James analyst concludes based on both estimates and valuation basis, Intel’s stock is poised to return to a more normalized level over time.
