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Why Intel Stock Looks Attractive amid the Market Sell-Off


Sep. 4 2020, Updated 6:56 a.m. ET

On Monday, Intel (NASDAQ:INTC) stock rose 8.2% and closed at $49.58 with a market cap of $212.1 billion. The stock price has risen 11.1% in the trailing five-day period, while it has fallen 6.9% in the trailing 12-month period. Intel stock is trading 28.5% below its 52-week high of $69.29 on January 24, 2020. The stock was also trading 15.7% above its 52-week low of $42.86 on May 23, 2019. On a YTD (year-to-date) basis, the stock has fallen by 17.2% as of Monday.

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Today, Intel announced that it has suspended its share buybacks citing coronavirus concerns. The company stated that the suspension of stock buybacks won’t impact cash dividend payments. Intel cautioned investors that the coronavirus outbreak could have a material impact on the company’s operating businesses. Last week, AT&T (NYSE:T) withdrew its share repurchase plan. Read AT&T Withdraws Share Buyback Plan amid Coronavirus to learn more.

Intel stock upgraded

At 10:20 AM ET, Intel stock was trading 6.1% higher at $52.58. The semiconductor stock also rose in the pre-market session. Today, Goldman Sachs analyst Toshiya Hari upgraded Intel stock to “neutral” from “sell” amid the coronavirus outbreak. However, the analyst reduced its target price on the stock from $55 to $54. According to a report from TheFly, “Intel has multiple near-term positive developments, including potential resilience in the high-end client CPU markets given a growing number of people working from home, that could largely offset the headwinds from weaker consumption and enterprise spending.” The report also said, “However, the analyst does not recommend buying the shares given Intel’s structural challenges from increased competition, growing capital intensity and pressure on margins.”

Exane BNP Paribas analyst Jerome Ramel also upgraded Intel stock to “outperform” from “neutral” with a target price of $65.

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Analysts’ recommendations for Intel stock

As of Monday, 44 analysts cover Intel stock. Among the analysts, 14 or ~31.8% recommend a “buy,” 21 or ~47.7% recommend a “hold,” and nine or ~20.5% recommend a “sell.” Analysts have an average target price of $63.85 on Intel. The target price implies a return of 28.8% based on the closing price of $49.58 on Monday. The consensus target price for the stock has fallen from $66.21 in February—a fall of 3.6%. The highest target price estimate is $85, while the lowest is $50.

Intel’s financial performance

In the fourth quarter of 2019, Intel reported sales of $20.2 billion with an adjusted EPS of $1.52. The sales rose 8.3% YoY (year-over-year) in the fourth quarter. The company’s CCG (Client Computing Group) segment reported revenue of $10.0 billion—a rise of 1.9% YoY. Meanwhile, the company’s DCG (Data Center Group) segment reported revenue of $7.2 billion—a rise of 18.8% YoY. Analysts expected the company to post sales of $19.2 billion and earnings of $1.25 in the fourth quarter.

Analysts expect Intel’s revenues to rise by 1.2% in fiscal 2020 to $72.8 billion. The sales will likely rise by 1.5% in fiscal 2021 to $74.0 billion. Analysts expect the company to post an adjusted EPS of $4.90 and $4.95 in fiscal 2020 and 2021, respectively.

Intel’s stock returns

Intel stock closed 5.5% below its 20-day moving average of $52.47 on Monday. However, the stock was 16.9% and 15.8% below its 50-day and 100-day moving averages of $59.65 and $58.88, respectively. Intel’s 14-day MACD is -1.00, which denotes a downward trading trend. With a 14-day relative strength index score of 44.07, the stock isn’t overbought or oversold.

Intel has an upper Bollinger Band level of $62.62. The company’s middle Bollinger Band level is $52.82, while its lower Bollinger Band level is $43.02. On Monday, Intel stock closed near its middle Bollinger Band level, which also implies that it’s neutral.

Today, the Dow Jones Industrial Average rose by about 7% at 11:06 AM ET. Also, the S&P 500 and the Nasdaq Composite rose about 6.11% and 5.2%, respectively. Micron (NASDAQ:MU) and Qualcomm (NASDAQ:QCOM) rose about 11.6% and 5.3%, respectively.

Intel’s dividend yield was 2.7% as of Monday. To learn more, read Why Intel Stock Could Rise on Q4 Earnings Beat.


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