Shares in chip maker Intel Corporation (NASDAQ:INTC) were rising on today’s market after a report from Piper Jaffray upgraded the firm’s outlook to neutral. The report, which cited Intel’s improving mobile processors as a catalyst for growth, put a price target of $21.92 on the company.
The report highlighted the continued weakness in Intel Corporation (NASDAQ:INTC) mobile business, but allowed for improvements as the company increases the utility of its mobile chips. According to the author of the report, Auguste Gus Richard, with the launch of the new Bay Trail line of chips, “Intel now has a low-end processor for tablets with good enough performance for consumers.”
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PC upgrades a boon for Intel
The report also highlighted the small downside in Intel price as the PC market remains large, though shrinking, and some trends are expected to work in the company’s favor in the coming months. Two of those trends are driven by decisions at the company’s long term partner Microsoft Corporation (NASDAQ:MSFT).
The coming end of support for Windows XP, which is due in April of 2014, is likely to spur upgrades in the corporate sector so vital to Microsoft, and Intel Corporation (NASDQ:INCT) fortunes. The Piper Jaffray analysts expect the corporate market to remain in favor of PC purchases over tablet purchases in the coming period.
The release of Windows 8.1, coming in October 2013, is another likely catalyst for PC sales according to the report. Intel Corporation (NASDAQ:INTC) is likely to benefit from the advances in the utility and user friendliness of Microsoft’s most recent operating system. The update is due to add features, like the Start Button, which have been familiar to Windows users for many years.
Dividend yield beats long term risk
The analysis shows that there are real long term risks for Intel Corporation going forward. The company has yet to make an impact in the mobile market and the dearth of sales of Microsoft Surface tablets has shown that demand for Windows 8 tablets hasn’t reached levels optimistic projections suggested.
Intel may be facing long term business threats, but the company’s dividend has a yield of 4.1%. That yield mitigates the downside in Intel stock, and results in the upgrade from Underweight to Neutral. In the last month Intel shares have dropped by more than 2% as the company’s prospects look less and less certain in a rapidly changing processor market.