Intel Corporation (NASDAQ:INTC) has been given a price target of $43, and the Buy rating has been reiterated by Bank of America analyst Vivek Arya. The price target and rating are based on the analyst’s observations during the company’s analyst and investor day, which was hosted recently by Bank of America for Intel in Hong Kong.
Many positives for Intel
Intel’s chip shipments are outnumbering PC demand, and investors are cautious about it. Answering this concern, the chip maker stated that it keeps its hubs and cages at customer manufacturing sites that ship products on a real-time basis, so there is very minimal chance of shipping too many.
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In the Data Center Group, trends are stable with connected devices, mobile transactions, big data and cloud. The average selling prices of the Data Center Group are positive but “create concern of saturation,” said Arya.
Intel did talk about its foundry and said it is an important segment, but in the longer run. The company has not allocated any major capital expenditures / capacity to the foundry, and any movement in the segment “would be upside to our model,” stated Arya.
The analyst said discussions with some of Intel’s tablet customers in the China tech ecosystem were very encouraging, as they are concentrated on the company’s turnkey model, software / supply chain resources and capacity to match customers with sales opportunities.
Focusing on wearables
Intel holds a 90% share of the notebook chip market, according to a report from market intelligence firm IDC. However, the company has acknowledged that it lags competitors in mobile chips, and therefore, it is taking a rather rational approach of focusing on the wearable market. Just like with PCs, the chip maker wants to get a maximum share of the wearable market. Intel is making chips for wearable and also buying start-ups and partnering with various companies to catch up with the trend, which is said to be worth $5.8 billion by 2018.
The chip maker recently entered into a multi-year partnership with Luxxotica, which is an Italian corporation in the eye wear industry that is responsible for names such as Oakley, Ray-Ban and Arnette and holds licenses to produce glasses for D&G, Chanel, Prada, and many more major designer brands. The companies will collaborate to make smart eye wear and expect to release their first device in 2015.