Intel to Print and Guide Below Consensus

By Sam Boughedda 

Citi analysts said in a note Thursday that they believe Intel (NASDAQ:) is likely to print and guide below consensus due to falling PC demand, share loss, and inventory build.

Intel will release third quarter results today, October 27, aftermarket.

The analysts, who have a Neutral rating and a $30 price target on the stock, explained that while OpEx cuts help a little but won’t solve the core problems of manufacturing and achieving growth targets.

“We expect Intel to report 3Q22 sales of $15.0 billion (down 2%), below consensus of $15.5 billion (up 1% QoQ) due to share loss and the PC correction. Our 3Q22 EPS (incl. SBC) of $0.18 is above consensus of $0.15 due to lower taxes and share count,” wrote the analysts. “We expect Intel to guide 4Q22 sales to $15.5 billion (up 1% QoQ), below consensus of $16.3 billion (up 5% QoQ) due to the PC and data center correction. We expect 4Q22 gross margin (incl. SBC) to be 47.0%, below consensus of 50.4%. Our 4Q22 EPS (incl. SBC) of $0.30 is 43% below consensus of $0.52.”

The analysts also expect Intel to announce major layoffs to reduce expenses, but they view the cost-cutting efforts as “inconsequential to solving the core problems of manufacturing and pursuing low-margin markets where Intel has no advantage.”

“We believe Intel’s dividends may be at risk in 2023 given its current capex plans. Our C23 EPS (incl. SBC) of $1.37 is 17% below consensus and we remain Neutral-rated on INTC and expect Consensus estimates likely to decline further,” they added.