Intel Corporation (INTC) Still Buy-Rated, Could Beat Consensus

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Intel Corporation (NASDAQ:INTC) releases its next earnings report on Tuesday, and analysts at MKM Partners say they have trimmed their estimates very slightly. However, they remain positive on the semiconductor maker and say by the end of the year, it could be in a good position to come out ahead of consensus on “mobility contributions and strength in data center.”

Intel Corporation (INTC) Still Buy-Rated, Could Beat Consensus

Intel still a Buy

Analyst Ada Menaker issued a report this week reiterating her Buy rating and $28 per share price target for the stock. She trimmed her 2013 and 2014 estimates because ongoing PC weakness will probably leave the company’s 2013 revenues flat. Nonetheless, she still remains over consensus in the out-year.

She suggests that “rumors of notebook’s demise” have been exaggerated greatly because manufacturers in Taiwan reported higher September shipments. However, she notes that even a second half uptick in PC sales probably won’t drive total PC sales higher for the full year. She is estimating that Intel Corporation (NASDAQ:INTC)’s PC Client Group will be down 3.6 percent this year. By the end of 2014, she estimates that traditional notebooks and PCs will make up just 60 percent of the company’s total revenue.

Intel’s new products look promising

The analyst noted that Intel introduced its second generation Atom server and next-generation Xeon E5 family based on Ivy Bridge chips. They said Intel’s Data Center division is still its fastest growing segment, and she believes it will continue to be in the near term because the company still dominates in traditional server and storage applications.

She notes that ARM-based systems could gain a larger share of the server pie, although she believes Intel Corporation (NASDAQ:INTC)’s C2000 family will make it more difficult for ARM to take share. She points out that Intel’s offerings have the benefits of x86 architecture plus better performance, competitive pricing, and lower power consumption.

Intel may challenge Qualcomm in LTE modems

Menaker also suggests that Intel could become a force to be reckoned with in the LTE modem market. She says right now the competition is intense, but since Intel has deeper pockets than many of its competitors as well as the patience to succeed, she believes the company will outlast competitors. She sees Intel going on to becoming a big challenger for QUALCOMM, Inc. (NASDAQ:QCOM).

She also reports that Intel is close to carrier qualification at a number of big service providers, including AT&T Inc. (NYSE:T).

Adjustments to Intel’s model

The analyst slightly changed her 2013 calendar year estimates for Intel Corporation (NASDAQ:INTC). She estimates revenue of $53 billion with earnings per share of $1.91. That’s compared to consensus of $53 billion in revenue and $1.92 per share in earnings. In calendar year 2014, she estimates $55.5 billion in revenue and $2.07 per share in earnings, compared to consensus estimates of $55 billion in revenue and $2 per share in earnings.

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