Intel Estimates Revised Upward By Needham

Intel’s 2016 estimates have been raised by Needham analysts, who maintained their Buy rating on the company’s stock. The raised estimates following the strong guidance given by the chip maker during its recent Analyst Day.

Intel Estimates Revised Upward By Needham

Intel gives a brighter outlook

Intel expects its PC business to stay flat despite the projected drop in the segment. The chip maker’s 2016 guidance came in better than Needham’s expectations in vital areas. For 2016, the chip maker expect overall revenue to rise by the mid-single digits and gross margin to be around 62%.

From 2015 to 2016, R&D spending and other operating expenses as a percentage of revenue is expected to drop by 50bps. For 2016, capital spending is projected to be around $10 billion, including $1.5 billion directed towards the factory upgrade in China.

Along with the bullish forecast, Intel also raised its annual dividend payout by 8 cents to $1.04 per share. For Intel, mobile has been a key area of concern, but the chip maker expects to lower its mobile losses, which are at about $3 billion, by around $1 billion this year and around $800 million in 2016.

Analysts bullish on Intel

Previously, Needham expected revenue to rise by 2.3% and gross margins to be around 60.6%. The analyst firm expected operating expenditures as a percentage of revenue to drop by 40bps. Needham has a price target of $12 on the chip maker. For 2016, Needham now expects Intel’s gross margin to be around 62%. The chip maker’s revenue is expected to rise by 2.3% at $56.5 billion. Intel’s 2016 EPS is projected to come in at $2.25, an increase from the previous estimate of $2.13. For 2017, Needham has left its estimates intact with revenue of $58.5 billion and EPS of $2.45.

David Wong of Wells Fargo reiterated his Outperform rating on the chip maker with a valuation range of $40 to $50.

“We think Intel has a strong lineup of products that will help it gain microprocessor market share. Intel also has a history of strong roadmap execution, enabling it to maintain a leadership position in microprocessor technology,” he said.

On Monday, Intel shares closed down 0.52% at $34.48. Year to date, the stock is down by almost 5% while in the last one year, it is down by over 1%.

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