Intel Shares Initiated with Hold Rating by Loop Capital

Loop Capital initiated coverage of Intel (INTC) with a Hold rating and $25 price target. The firm believes TSMC's advanced-node manufacturing is better than Intel's and views TSMC as the "obvious manufacturing partner" to make Intel's products competitive with AMD, Nvidia, and Arm. Loop sees a shift away from foundry as necessary for Intel to cover its fixed costs.

Loop Capital has initiated coverage on Intel (INTC) with a Hold rating and a price target of $25.00. The firm's analysis highlights the superior advanced-node manufacturing capabilities of Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) compared to Intel's. According to Loop Capital, TSMC stands out as the preferred manufacturing partner to enhance Intel's competitiveness against industry players like AMD, Nvidia, and Arm [1].

The firm suggests that Intel's broader strategy may face challenges if its foundry segment cannot depend on the volume from Intel Products. This could potentially impact the company’s ability to manage fixed costs efficiently. Loop Capital indicates that a strategic pivot away from the foundry model could make Intel shares more appealing [1].

Wall Street analysts have forecasted an average target price of $21.56 for Intel (INTC) over the next year, with a high estimate of $28.30 and a low estimate of $14.00. The average target implies a downside of 7.29% from the current price of $23.26 [2].

Intel is grappling with uncertainties surrounding its foundry business, prompting analysts to adopt a cautious stance ahead of its second-quarter earnings report. Market projections indicate that Intel's second-quarter revenue will amount to $119.3 billion, reflecting a 7% year-over-year decline. The adjusted net profit is expected to be $74.5 million, with earnings per share at $0.02, compared to $83 million and $0.02 per share in the same period last year. The foundry division's revenue is anticipated to decrease by 7% to $3.98 billion [3].

Analysts are closely scrutinizing Intel's foundry business, which has become a significant area of interest for investors. Reports suggest that the newly appointed CEO, Pat Gelsinger, is contemplating changes to the company's chip manufacturing operations. This potential shift could lead to Intel writing off billions of dollars in chip manufacturing technology, classifying it as an impaired asset [3].

Intel's stock has seen a 15% increase year-to-date, closing at $23.10 on July 18. However, the upcoming earnings report will be crucial in determining whether this positive momentum can be sustained [3].

References:
[1] https://www.gurufocus.com/news/2991826/why-tsmc-tsm-is-crucial-for-intels-competitive-edge-tsm-stock-news
[2] https://www.gurufocus.com/news/2991999/intel-intc-receives-hold-rating-from-loop-capital-with-25-target-intc-stock-news
[3] https://www.ainvest.com/news/intel-faces-7-revenue-drop-foundry-uncertainty-earnings-2507/