Wolfe Research was bearish on Intel stock due to concerns about startup costs and margins. By Investing.com
Wolfe Research on Wednesday maintained an Underperform rating on shares of Intel Corporation (NASDAQ:) with a steady price target of $31.00. The company highlighted concerns about startup costs and the impact of outsourcing on the profit margins of tech giants by 2025 (CY25).
According to the company’s analysis, Intel executives expect startup costs to peak in CY24, but noted that these costs will continue to pose significant challenges in CY25. Additionally, Intel’s expected 18A processor production increase in the second half of 2025 (2H25) is not expected to provide much of a boost to the income statement until CY26. This is when a larger volume of processor tiles are expected to transition from external to internal production.
A statement from Wolfe Research highlighted that peak start-up costs and outsourcing pressures in CY24 could lead to a gradual improvement in margins in the following years. However, the company remains cautious about Intel’s near-term financial outlook due to these ongoing cost factors.
InvestingPro Insights
In light of Wolfe Research’s Underperform rating for Intel Corporation (NASDAQ:INTC), InvestingPro data and tips provide additional context for investors. Intel’s current market capitalization is $187.05 billion and a high price-to-earnings (P/E) ratio of 108.68, which further increases to 116.94 when adjusted for the past 12 months as of Q4 2023. During the same period, the company recorded quarterly revenue growth of 9.71% in the first quarter of 2023.
Two InvestingPro tips that stand out are Intel’s expected net profit growth this year, which could signal a positive turnaround in profitability and its status as a prominent player in the semiconductor and semiconductor equipment industry. The latter is especially relevant as companies navigate start-up costs and outsourcing challenges highlighted by Wolfe Research. Additionally, Intel has maintained its dividend payments for 33 consecutive years, which may be an indication of the company’s commitment to shareholder returns despite current financial pressures.
For investors looking for a more in-depth analysis, more InvestingPro tips are available, including insights into Intel’s valuation multiple and profitability projections. Use coupon code Pro Newz 24 For additional expert advice, save an extra 10% on annual or biennial Pro and Pro+ subscriptions. These insights can help investors better understand Intel’s financial environment when evaluating the Wolfe Research rating for the company’s market performance and future prospects.
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