Goldman Sachs analyst Toshiya Hari reiterated a Sell rating on Intel Corp (NASDAQ:INTC) with a price target of $28.
Ahead of Intel’s 3Q23 EPS release scheduled for October 26, Hari updated the earnings model (i.e., reduced out-year gross margins and EPS) and discussed critical debates that have come up in recent conversations with investors.
While he recognized the improving PC and stabilizing enterprise server demand backdrop, the company’s improved execution (i.e., on-time process technology and product ramps), and potential benefits associated with ongoing cost optimization initiatives, he remained Sell-rated on the stock and awaited signs of a stabilization in Data Center wallet share before potentially turning more constructive.
Hari reduced FY23, FY24, and FY25 non-GAAP gross margins from 40.7%, 47.1%, and 50.2% to 40.6%, 42.5%, and 47.7% as he now assumes stronger headwinds resulting from the ramp of new products on new process technologies.
Hari’s FY23, FY24, and FY25 non-GAAP EPS estimates (excluding SBC) decreased from $0.77, $1.94, and $2.81 to $0.77 (vs. consensus $0.62), $1.26 (vs. consensus $1.74) and $2.20, respectively, on lower gross margin and slightly higher operating expenditure.
Hari projects corresponding revenue of $53.097 billion (vs. consensus $52.48 billion), $58.696 billion (vs. consensus $58.66 billion), and $64.507 billion.