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Intel Corporation Holds 50% Upside Potential: Jefferies

Intel shares could move up 50% from the current price, according to Jefferies. In a report on Thursday, Jefferies stated that the chip maker is expected to supply cellular system on a chip integrated circuits with China-based Rockchip and Spreadtrum by the second half of the calendar year 2015.

Intel Corporation Holds 50% Upside Potential: Jefferies

Upside potential for Intel

Analyst Mark Lipacis stated, “By 2HCY15, we expect Intel to be shipping cellular SoCs with China-based RockChip and Spreadtrum, the latter of which has 30-40% of the China handset market.”

In the second half of 2015, Intel is expected to narrow its mobile losses, and Lipacis sees a potential for a Tier 1 Original Equipment Manufacturer model in early 2016. The sell side firm notes that this development will improve sentiment in the stock. His models suggest that there could be an increase in earnings per share to $3 for fiscal 2016, which is 25% more than the street’s consensus.

Another analyst from Jefferies, Sandeep Bajikar, stated that the innovation in 3D NAND could give a cost advantage to Intel and Micron Technology, allowing them to capture a larger share of future profits. Micron Technology and Intel are using a different version of NAND compared to Samsung Electronics Ltd and SK Hynix’s charge flash trap, notes the analyst.

Analysts bullish on Intel

For the latest quarter, Intel profits were up and revenue was flat, but was in-line with the revised guidance from the chip maker in March. The firm lowered its quarterly and full-year outlook owing to sluggish PC sales.

The Jefferies analysts have assigned a Buy rating to the chip maker with a price target of $48. Analysts suggest that PE of Intel is discounted compared to its peers, but is in line with its own historical average.  A total of 26 analysts (out of 51) currently have a Buy on Intel shares, compared to 18 who have assigned the stock a Hold rating. The 12-month average target price on Intel stands at $35.55. On Thursday, Intel shares closed up 0.08% to $32.24, and year to date, the stock is down more than 12%.