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Q3 Preview: Intel (INTC) May Already Have Priced In Downside Ahead of Results

Intel Corp. (Nasdaq: INTC) is trading slightly lower Tuesday, ahead of its expected third-quarter results release.

After the market closes, revenue is expected to be $13.90 billion with earnings of 61 cents per share. Earnings would be a 3.4 percent increase over last quarter, and 17.3 percent gain from 52 cents per share reported in the same period last year.

Intel fell just 2.8 percent to $21.34 at the end of September. Shares are up 8.7 percent since the end of the quarter, and up 13.2 percent for 2011.

The chip giant reported a book value per share of $9.22 as of last quarter's data. Further, shares are trading with a forward P/E of 9.5 times fiscal 2012 expectations, compared with 7.9 times at Advanced Micro Devices ( AMD ) and 12.7 times for Texas Instruments ( TXN ).

Data from Bloomberg has 34 analysts with a Buy on Intel, 15 at Hold, and 5 carrying a Sell rating. The price target average on the Street is $25.75, with a low of $18 and high of $32. Intel has traded within a range of $18.90 to $23.96 over the last 52-week time frame.

Analyst Comments

  • JPMorgan is modeling for earnings of 59 cents per share. JPMorgan sees Intel reporting revenue of $13.5 billion, which is at the low-end of Intel's guidance calling for $13.5 to $14.5 billion in revs. JPMorgan notes weaker PC demand on the call.

    JPMorgan expects total inventories for the chips to drop 1 day below the 5-year average of 75 days. The firm also sees global handset shipments increasing 1 percent for the quarter, below the 8 percent average gain.

  • Wedbush is modeling for earnings of 62 cents per share and revenue of $13.98 billion. Wedbush believes drivers to upside for Intel in the quarter include: (1) strength in emerging markets, (2) product mix, (3) stable ASPs, and (4) ramp of Sandy Bridge."

  • Kaufman Bros. sees earnings of 63 cents per share and revenue of $14.01 billion. Kaufman is positive on Intel revs given "a mixed computing demand environment (i.e.,strong enterprise offset by weaker consumer) coupled with good trends in inventory in the Computing supply chain."

    Continuing, "In terms of 3Q11 gross margin and EPS, we are modeling gross margin of 64% (a 400 bps increase Q/Q), which we think is achievable given the stronger trends we have observed in Enterprise (server chips), which carry both higher gross and operating margins."

  • Deutsche Bank is expecting earnings of 62 cents per share and revenue of $13.95 billion from Intel. Deutsche cites "as strength in Enterprise (Servers & Clients) and mix-driven ASP improvement offsets lower-than seasonal Consumer PC demand." Deutsche is also looking for gross margins of 63.5 percent, but expect upside due to better product mix and improved cost reductions.

Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out Intel's past performance at Streetinsider's Intel Income Statement .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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