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Could Intel’s Q4 Earnings Report Boost Its Stock?

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Intel (NASDAQ:INTC) stock fell 0.10% on January 17 and closed at $59.60. The stock was trading 2.3% below its 52-week high of $60.67. Meanwhile, the stock was trading 39.1% above its 52-week low of $42.86. At the closing price on January 17, Intel had a market capitalization of $259.3 billion.

Intel stock has underperformed its peers and the broader sector. The stock has only gained 23.0% in the last 12 months. In comparison, the S&P 500 Index has risen by 24.7%. AMD and Nvidia (NASDAQ:NVDA) have gained 151.5% and 64.3%, respectively, this year. Other chip stocks including Qualcomm (NASDAQ:QCOM), Micron (NASDAQ:MU), and Broadcom (NASDAQ:AVGO) have returned 75.1%, 70.2%, and 20.9%, respectively.

What can investors expect from Intel’s fourth-quarter results? The company is scheduled to report its results after the closing bell on Thursday.

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Intel’s fourth-quarter and 2019 expectations

Intel expects sales of $19.2 billion in the fourth quarter—a rise of 3.0% YoY (year-over-year). The chipmaker expects the operating margin to fall 2% YoY to 33.5% in the fourth quarter. The company also expects its adjusted EPS to fall 3.0% to $1.24.

During the third quarter, Intel raised its revenue guidance by $1.5 billion to $71.0 billion for fiscal 2019. The semiconductor giant increased its 2019 adjusted EPS guidance to $4.60. Meanwhile, the operating margin will likely remain at 32.5% for 2019.

Wall Street analysts expect Intel to post sales of $19.2 billion in the fourth quarter—a rise of 3.0% YoY compared to $18.7 billion in the fourth quarter of 2018. Also, analysts expect the company’s adjusted EPS to fall by 2.3% YoY to $1.25 in the fourth quarter.

Analysts expect Intel’s revenues to rise by 0.2% in 2019 to $71.0 billion. The sales will likely rise by 1.8% in 2020 to $72.4 billion. The adjusted earnings are also expected to rise by around 0.7% in 2019 to $4.61 per share. However, the profits are expected to rise by 1.5% to $4.68 per share in 2020.

According to a MarketWatch report on January 17, “Intel Corp. is looking to hand in its second quarter of revenue growth in a row after sales stalled at the beginning of 2019, but only if data-center sales growth can offset declines in the chip maker’s largest segment.”

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The report also said, “At CES, Intel announced new laptop and server chips along with new mobile processors code-named Tiger Lake, and the chip maker clearly benefited from 2019’s return to PC sales growth. Data-center sales, however, remain the focus as they’re Intel’s largest segment that is showing growth.”

Analysts’ recommendations and target price for Intel

Among the 43 analysts covering Intel stock, 15 have a “buy” rating, 19 have a “hold” rating, and nine have a “sell” rating.

Currently, analysts have a 12-month target price of $57.19 on the stock. On January 17, the stock was trading at a discount of 4.0% to analysts’ 12-month target price. The median target price was $59.00 on the same date.

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Intel stock’s valuation

Currently, Intel stock is trading at 12.75x its fiscal 2020 estimated non-GAAP EPS of $4.68. The stock is also trading at 12.82x its fiscal 2021 estimated non-GAAP EPS of $4.65. Analysts expect Intel’s earnings to rise at a compound annual growth rate of 7.0% in the next five years.

Technical level

Based on the closing price on January 17, the stock was trading 0.2% above its 20-day moving average of $59.60. The stock is also trading 2.1% above its 50-day moving average of $58.36 and 8.3% above its 100-day moving average of $55.03.

Intel’s 14-day RSI (relative strength index) score is 56. The score indicates that the stock isn’t overbought or oversold. Intel’s upper, middle, and lower Bollinger Band levels are $60.64, $59.46, and $58.28, respectively. On January 17, the stock closed near its middle Bollinger Band level, which indicated that it isn’t overbought or oversold.

On January 17, Intel’s dividend yield was 2.11%. Read Could Intel Stock Reach New Highs? and Why is a BoAML Analyst Bullish on Intel after Headwinds? to learn more. You can also see Intel’s CPU Shortage: Impact on Chip Giant, PC Makers.

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