Intel (INTC.US) to Release Earnings; Upgraded to 'Hold' by HSBC

Intelligenct Technology's (INTC.US) rating has been raised to "Hold" from "Sell" by HSBC, which maintains a target price of US$20. The company is scheduled to report its fourth-quarter 2024 financial results on January 30. The consensus expects adjusted EPS of US$0.12 and revenue of US$13.83bn.

Analysts Frank Lee and Pulkit Aggarwal of HSBC said in a Tuesday investor note: "The stock has adjusted ~26% since Intel's Q2 2024 results on August 2, 2024, and we believe the target of US$20 is now reasonable. We believe the market has digested the uncertainty around the execution of IDM2.0 strategy and the loss of senior management with the CEO Pat Gelsinger's resignation in December 2024."

Lee said: "Entering Q1 2015, we expect some softness in revenue, our estimate of US$12.6bn implies a sequential decline of 9%, while the consensus expects a sequential decline of 6%. We believe this could be due to the underperformance of the data center segment. We expect this to put pressure on the gross margin, and thus our expectation of 38.5% for Q1 2025 gross margin is still below the consensus of 39.1%."

HSBC also noted that Intel did not provide a clear path to achieve its foundry targets. Lee added: "While we acknowledge that Intel's worst seems to be over, with all the negatives of the past few months already priced in, we believe it is still premature to have a clear view on whether the execution of the plan will bring a full recovery of the business."