Intel downsizing and organizational restructuring not enough, analyst fears – Intel (NASDAQ:INTC)

  • BofA analyst Vivek Arya maintained an underperformance on Intel Corporation INTC and a price target of $30.
  • Two separate media reports suggested INTC’s plan to cut its marketing and sales workforce by 20% and create greater decision-making separation between its design and manufacturing teams.
  • Both steps were necessary but insufficient to change its fundamental concerns about key strategic, competitive and financial risks, Arya mentioned in his memo Wednesday titled “First Approach to Workforce Reductions, Design/Manufacturing ‘Separate’.”
  • The media are talking about possible cost reductions and Advanced Micro Devices, Inc. AMD recent PC-related warnings suggest greater downside risk to INTC’s Q4 and Year 23 estimates.
  • However, according to its current estimates, a 20% reduction in CY23E’s marketing and sales expenses could increase CY23’s net income by $1.3 billion, helping INTC meet its dividend commitment of approximately $6 billion. dollars.
  • Despite the company’s efforts to cut costs, the fundamental drawbacks of INTC remained.
  • While INTC continues to pursue its IDM strategy, it believes today’s news is the first step in what is an inevitable separation of design and manufacturing.
  • His price target is based on the low-end multiple of IT peers, which he considers appropriate given the manufacturing uncertainties and risks of the new foundry strategy.
  • Barclays analyst Blayne Curtis cut Intel’s price target to $30 from $35 and maintained an underweight.
  • September laptop volumes were slightly worse, but the outlook for the fourth quarter is “moving much lower,” Curtis noted.
  • He said the PC market appears to be bottoming out, with 2022 nearing pre-pandemic levels.
  • Price action: INTC shares traded down 0.68% to $24.87 when last checked on Wednesday.

Aubrey L. Morgan