Intel Corporation Price Target Cut By Citi

Intel LogoBy The original uploader was VD64992 at English Wikipedia [Public domain], via Wikimedia Commons

Weakening PC demand means Intel needs to ramp up its efforts in the mobile sector

The price target for tech giant Intel was lowered from $35 to $34 by Citi analysts, who maintained Neutral rating on the stock, in a report issued on Thursday. Citi analyst Chritopher Danley cited declining demand for PC units as the primary reason for reducing the price target.

Weak PC demand to blame

Danley decreased his revenue estimate for Intel from $57.3 billion to $56.9 billion for fiscal year 2015. Additionally, Danley dropped FY15 earnings per share estimates from $2.27 to $2.20 again blaming weakening PC demands for the lowered estimates. The FY15 EPS estimate from Danley is 8.3% below the consensus estimate of $2.4.

According to Citi Information Technology and Hardware analyst, Jim Suva, PC shipments for 2015 will drop year over year by 2%, while the research firm’s last PC shipments estimates suggested PC numbers would remain flat this year.

The firm believes that PC unit revenues will be significantly lower in 2015, impacting the earnings of the entire industry, including Lenovo Group, Hewlett-Packard and Intel.

Intel still to prove itself in mobile space

Intel still depends heavily on the PC market as can be seen from its recent earning report. In fiscal year 2014, its PC business saw an increase of 4% in revenue and a 25% increase in the operating profit.

According to a LinkedIn Profile of an Intel employee, the company is gearing up to launch Broxton for the low-cost notebook or tablet PC market. To lower its dependence on PCs, and move towards mobile and tablet space, the chip maker has taken several steps, but it is still playing catch up in the segment

PC market growth has been marked by innovations across multiple segments in both the consumer and enterprise market. In the future, continuing innovations along with plenty of new options is expected to support the growth of the PC segment.

However, more and more companies are going for bring your own devices (BYOD) policies, which may not be a good sign for Intel, according to a report from Yahoo.

On Thursday, Intel shares closed down 0.83%, while year to date the chip maker is down over 7%.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at [email protected]

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