Intel stock added to Friday’s gains on Monday following a big upgrade from analysts at BMO Capital. Short-sellers are feeling the pain today as the chip maker is a hugely popular position. Intel stock looks on track for its highest level since the plunge in 2000, which it has never fully recovered from.
Intel stock upgraded by BMO
In a note to investors on Monday, BMO analyst Ambrish Srivastava said he upgraded Intel stock from Market Perform to Outperform and boosted his price target from $37 to $58 per share. According to MarketWatch, he has kept his rating for the chip maker at Market Perform since June 2015, and he cited the biggest reason for his upgrade as a belief that it finally is adopting some financial discipline.
Deutsche Bank analyst Ross Seymore said in a note last week that Intel beat “in the right places” on its third-quarter earnings report, delivering a “solid” beat and raise. Even though Intel stock chugged higher going up to that report early last week, he saw further upside as he expects the company’s Data Center Business to keep posting solid growth over the next two or three quarters.
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However, today’s gains put Intel stock very close to his target price of $45 per share, so he may be faced with two options soon: raise his target price or downgrade the stock. As of Friday, he had a Buy rating on Intel stock, and he raised his price target on the stock following the company’s third-quarter earnings report.
Intel posts a beat and raise
The chip maker reported $16.1 billion in sales, beating the consensus of $15.7 billion, on pro forma earnings of $1.01 per share, versus the consensus of 80 cents per share. However, Seymore noted that about 8 cents of the earnings per share beat came from one-time gains from Intel Capital. Gross margin came in at 63.9%.
For the fourth quarter, Intel guided for about $16.3 billion in sales at the midpoint, while the consensus stood at $16.1 billion. The chip maker guided for a fourth-quarter gross margin of 63%. Implied earnings per share guidance was 86 cents per share at the midpoint, he added. Intel also raised its full-year guidance to earnings of $3.25 per share on $62 billion in sales. Consensus stood at $3.01 per share on $61.4 billion before Thursday’s earnings release.
Analysts from multiple firms boosted their price targets for Intel stock after the print.
Short-sellers feel the heat on Intel stock
Short-sellers were already taking a beating on Intel stock following the company’s earnings report Thursday night. The stock popped by nearly 7% on Friday, and financial analytics firm S3 Partners data showed short-sellers recorded $367 million in mark-to-market losses just on Friday alone. S3 director Brett Weiss added that short interest in Intel was near record highs at 128.8 million shares and $5.6 billion as of Friday. Intel stock is the third-biggest short position among S&P 500 companies.
Intel stock popped by about 1% early Monday before reversing course. As of this writing, it is up 0.66% at $44.70.