[GAM] Expectations UP for Intel’s Declaration of’Foundry Challenge’… Wall Street views are mixed

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[서울=뉴스핌] Reporter Min Ji-hyun = Pat Gelsinger, the new CEO of Intel (Nasdaq: INTC), declared that he would lead Intel’s revival, saying’Intel is back’, but Wall Street analysts are not sure.

On the 23rd, the previous day, Intel announced a plan to build two semiconductor factories by investing 20 billion dollars in Arizona, and announced that it will start the foundry (consigned semiconductor production) business in earnest. Intel announced its entry into the foundry market in 2016 and withdrew after two years.

With this plan, amid growing concerns about a global semiconductor supply shortage, Intel will be able to produce semiconductor chips for other companies.

Intel, which showed a 3% weakness in the regular market on this day, rose more than 5% in after-hours trading after the related news was delivered, reflecting the expectations of investors. On the 24th (local time) at 10:37 a.m. EST, Intel is trading at $63.54, up 0.08%.

However, according to CNBC, Wall Street experts’ reaction to Intel Foundry Service (IFS) was mixed.

Citigroup said in an investment note on the day that Intel is not ready to take a new strategy, suggesting a’neutral’ opinion and target of $65.

Citi wrote, “Intel needs several foundry veterans to run a business and change the way the company works, and Intel doesn’t do this, so I don’t think there is any chance of success in the business.”

Intel logo [사진=로이터 뉴스핌]

Goldman Sachs also expressed skepticism by re-emphasizing the’sell’ opinion. This is because Intel is spending $20 billion on new factories and other up-front investments are reducing the size of the company’s free cash flow, as well as a conflict of interest with competitors.

In a memo, Goldman said in a memo, “Even if IFS starts out as an independent operator from Intel, many of the large fabless consumers competing with Intel will hesitate to cooperate with IFS.”

On the other hand, experts who are optimistic about Intel’s new move are also tough. Investment bank Robert W. Beard added Intel to the’Fresh Pick’ list on the day and adhered to the opinion of’Out-Perform’.

Baird said, “We are currently seeing the worst capacity constraints since the late 90s, and relying solely on Taiwan TSMC as a geopolitical environment is becoming increasingly dangerous.” “All you have to do is run it in the most friendly environment for the year.”

Baird suggested a target price of $85 to Intel, predicting a 33% increase from the current level.

Intel has been struggling to get its direction back in recent years, and stock prices have been trapped between $45 and $65 a share. Production of the 7nm (nanometer) process has been repeatedly delayed.

Intel logo [사진=로이터 뉴스핌]

In addition to Citi, Goldman, and Baird, various IBs who gave investment opinions to Intel on this day gave various opinions.

Credit Switzerland set an’out-perform’ opinion and a $80 target price and said, “While investors are extremely skeptical about IFS, we are not.” “Foundry is a logical way to double the total effective market (TAM) to $200 billion. “I said.

Wells Fargo suggested’equal weight’ and a target price of $70.

Bank of America (BofA) gave a $62 and’under-perform’ opinion. Although the new CEO of Intel sees confidence and bold push for new opportunities to receive incentives from the U.S. government, he maintains a cautious attitude toward stocks.

Atlantic Equity also raised its target price from $55 to $63, suggesting’neutral’ to Intel. Intel’s unique combination of design and manufacturing capabilities can be attractive to fabless customers, and a rise in foundry market share may offset AMD’s lost share in the CPU market, but given the strength of its foundry rival TSMC, he is hesitant to recommend a buy.

On the other hand, Needham raised its target price to US$74 from US$70 along with the’Buy’ opinion. With foundry production facilities currently concentrated in Asia, Intel has addressed the need for geographically balanced manufacturing capacity after offering to meet the demand for foundries in the US and Europe.

According to TipRanks, which provides investment opinion and financial information, Wall Street’s average rating for Intel is’Hold’.

Of the 33 analysts who analyzed Intel in the last three months, 13 had a “buy” opinion, but 12 had a “holding” opinion, and 8 made a “sell” opinion. Intel’s target price average is $64.97.

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