Why Did Intel Stock Tank on Friday?



Stock fell 9% on April 26

Semiconductor (SMH) giant Intel (INTC) fell 9% on Friday, April 26 to close trading at $52.43. The stock is currently trading 24% above its 52-week low of $42.36 and 12% below its 52-week high of $59.49. Intel announced its first-quarter earnings on April 25 and reported sales of $16.06 billion. Sales were flat YoY and $70 million above Wall Street’s average estimate. Non-GAAP (generally accepted accounting principles) EPS were $0.89 and higher than analysts’ average estimate of $0.87.

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So why did the stock fall if Intel’s results were in line with estimates? The company’s outlook for 2019 left investors unimpressed. Intel expects sales of $69 billion with non-GAAP EPS of $4.35 in 2019, which was below the earlier sales forecast of $71.5 billion and EPS forecast of $4.60.

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Intel’s data center vertical’s sales fell over 6%, while pricing issues in NAND drove non-volatile memory sales lower by 12% in the first quarter. During Intel’s earnings call, CEO Robert Swan stated that the slump in memory pricing has intensified and has been higher than previously anticipated. Driven by Intel’s lackluster guidance, NVIDIA (NVDA) and Western Digital (WDC) fell 4.7% and 3.8%, respectively.

Is Intel trading at a discount after its stock price decline?

Out of 41 analysts tracking Intel, 23 recommend a “buy,” 13 recommend a “hold,” and five recommend a “sell” on the stock. Analysts have a 12-month average target price of $55.45 for Intel. The stock is currently trading 5.8% below analyst target estimates.

Intel has a 2019 forward PE ratio of 11.08x. Compared to this ratio, its earnings are expected to fall by 1.5% in 2019, indicating that the stock is currently overvalued.


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