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Intel Stock: Why Are Analysts Bullish amid the Sell-Off?

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On March 27, Intel (NASDAQ:INTC) stock fell 5.71% and closed at $52.37. At this closing price, Intel’s market cap was about $224 billion. The stock price has declined around 5.67% this month. On a YTD (year-to-date) basis, the stock has fallen 12.1% amid the stock market sell-off due to the coronavirus. Intel stock is trading 24.4% below its 52-week high of $69.29, which it achieved on January 24, 2020. The stock was also trading 22.2% above its 52-week low of $42.86, which it reached on May 23, 2019. No company has been spared amid the coronavirus. The pandemic has led to a bloodbath in the broader equity markets too. While the S&P 500 has fallen more than 21% YTD, the Dow Jones has lost over 24%. Meanwhile, the Nasdaq has fallen over 16% YTD.

Last week, Intel suspended its share buyback program due to coronavirus concerns. The company also warned its investors that the coronavirus outbreak could hurt its operating businesses. Last week, many companies, including The Gap (NYSE:GPS), Target (NYSE:TGT), and Dell (NASDAQ:DELL), pulled their guidance due to the coronavirus risk. AT&T (NYSE:T) also withdrew its share repurchase plan last week. In contrast, Micron delivered upbeat earnings and raised its guidance.

Analysts upgraded Intel stock

Despite the widespread COVID-19 risk, analysts are turning bullish on Intel stock. Last week, four analysts upgraded the stock. Notably, analysts are optimistic that the semiconductor company could witness a rise in notebook demand. More people are working from home amid the coronavirus pandemic. Last week, Needham upgraded Nvidia stock amid the coronavirus outbreak.

On March 24, Goldman Sachs analyst Toshiya Hari lifted its rating on Intel stock to “neutral” from “sell.” However, the analyst cut its target price on the stock to $54 from $55. According to the analyst, Intel could benefit from “potential resilience in the high-end client CPU markets,” as mentioned in a report from TheFly. On the same date, Exane BNP Paribas analyst Jerome Ramel also upgraded Intel stock to “outperform” from “neutral.” The analyst reiterated a target price of $65. On March 25, Argus Research raised its rating to “buy” from “hold” on Intel stock. Argus analyst Jim Kelleher reiterated a target price of $65 on the stock.

On March 26, a Bernstein analyst ended his bearish call on Intel. Bernstein analyst Stacy Rasgon upgraded the stock to “market perform” from “underperform” with a target price of $50. According to Rasgon, Intel could face disruptions due to the COVID-19 outbreak as “the company is replenishing channel inventories,” as reported in MarketWatch. Rasgon is also impressed by Intel’s strong balance sheet and lower valuation, which should support the stock during this crisis. Intel’s hyperscale data-center spending is also turning positive for the stock. As a result, Bernstein has named Intel stock as “the biggest umbrella” that can withstand the coronavirus compared to its peers.

Analysts’ recommendations for Intel stock

Among the 44 analysts that cover Intel stock, 14 or ~31.8% recommend a “buy”—higher than 13 analysts last month. Meanwhile, 22 or ~50.0% of the analysts recommend a “hold” compared to 20 analysts the previous month. Eight or ~18.2% of the analysts recommend a “sell” compared to ten last month. Intel’s average target price is $63.05, which implies a return of 20.39% based on the closing price of $52.37 on March 27.

Analysts’ projections

Analysts expect Intel’s revenues to rise by 0.69% in fiscal 2020 to $72.5 billion. The sales will likely increase by 1.8% in fiscal 2021 to $73.8 billion. Analysts expect the company’s adjusted EPS to decline by 0.5% to $4.84 in fiscal 2020. However, analysts think that the adjusted EPS will improve by 1.54% to $4.94 per share in fiscal 2021.

Intel’s stock returns

Intel has a 14-day relative strength index score of 48.07, which means that it isn’t overbought or oversold. The company had an upper Bollinger Band level of $60.37 on March 27. Intel’s middle Bollinger Band level is $51.86, while its lower Bollinger Band level is $43.36. On March 27, Intel stock closed near its middle Bollinger Band level, which also implies that it’s neutral.

Intel has been facing numerous challenges, including a delay in the manufacturing issues, increased competition from AMD, and a slowdown in enterprise spending. The company’s margins are also under pressure. However, the stock could still be an excellent near-term buy amid the growing demand for high-end CPUs. Meanwhile, many analysts also consider semiconductor giants Nvidia and Advanced Micro Devices amid the market crash.

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