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Could Intel’s Q1 Earnings Report Boost Its Stock?

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Intel (NASDAQ:INTC) stock rose 6.6% on Wednesday and closed at $60.10. The stock was trading 13.3% below its 52-week high of $69.29. Meanwhile, the stock was trading 40.2% above its 52-week low of $42.86. At the closing price on Wednesday, Intel had a market capitalization of $257.3 billion.

Intel stock has gained 4.3% in the last 12 months. In comparison, the S&P 500 Index has fallen by 4.4%. Advanced Micro Devices (NYSE:AMD) and Nvidia (NASDAQ:NVDA) have gained 102.2% and 53.1%, respectively. Other chip stocks including Qualcomm (NASDAQ:QCOM), Micron (NASDAQ:MU), and Broadcom have returned -12.2%, 2.7%, and -16.6%, respectively.

What can investors expect from Intel’s first-quarter results? The company will likely report its earnings results today after the closing bell.

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Intel’s Q1 and 2020 expectations

Intel expects total revenues of $19 billion in the first quarter, which is a growth of 18% YoY (year-over-year). The company could increase its data-centric sales by 25% YoY. The semiconductor company expects the operating margin to rise 7% YoY to 35%. Intel also thinks that its adjusted EPS could rise 46% YoY to $1.30.

In 2020, Intel expects to report revenues of $73.5 billion—a growth of 2% YoY. The company also thinks that the operating margin will remain flat YoY at about 33%. Intel expects its adjusted EPS to rise by 3% YoY to $5.00. In 2020, Intel could report capex and free cash flow of $17 billion and $16.5 billion, respectively.

Wall Street analysts predict that Intel will post sales of $18.7 billion in the first quarter—a rise of 16.4% YoY compared to $16.1 billion in the first quarter of 2019. Also, analysts expect the company’s adjusted EPS to rise by 43.8% YoY to $1.28 in the first quarter.

In the first quarter, Intel’s free cash flow will likely rise to $4.2 billion from $1.6 billion a year ago. The company’s operating cash flow will likely rise by 80.6% YoY to $9 billion. Meanwhile, the company’s capital expenditures could increase by 26.6% YoY to $4.2 billion in the first quarter. Intel is also expected to return $1.4 billion to shareholders in the form of dividends. On Wednesday, the company’s dividend yield was 2.2%.

Analysts also think that Intel’s revenues will rise by 0.7% in 2020 to $72.4 billion. The sales will likely rise by 1.8% in 2021 to $73.7 billion. The adjusted earnings are also expected to fall by 0.8% in 2020 to $4.83 per share. However, the profits could rise by 1.4% to $4.90 per share in 2021.

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Analysts’ recommendations for Intel stock

Intel stock is tracked by 44 Wall Street analysts. Among the analysts, 16 recommend a “buy,” 23 recommend a “hold,” and five recommend a “sell.” Analysts’ mean target price on the stock is $63.38, which implies a 5.5% gain from the current level of $60.10. The consensus target price for the stock has fallen from $63.88 in March—a fall of 0.8%.

On Wednesday, Jefferies analyst Mark Lipacis increased its target price on Intel stock from $53 to $62 with a “hold” rating. According to a report from TheFly, Lipacis cited “high data center leasing volumes, strength in cloud processor-only instances and channel checks suggesting strength in demand for work-from-home components as three data points that suggest positive data center revenue trends for the company in the first quarter.”

AMD, Nvidia, and Micron have average broker target prices of $50.87, $300.00, and $61.72, respectively. These figures imply returns of -9.0%, 4.8%, and 40.6%, respectively, over the next 12 months.

Intel stock’s valuation

Currently, Intel stock is trading at 12.43x its 2020 estimated non-GAAP EPS of $4.83. The stock is also trading at 12.25x its 2021 estimated non-GAAP EPS of $4.90. Wall Street expects Intel’s earnings to grow at a CAGR of 9.1% in the next five years.

Technical analysis

Based on the closing price on Wednesday, Intel stock was trading 5.7% above its 20-day moving average of $56.86. The stock is also trading 5.8% above its 50-day moving average of $56.81 and 2.4% above its 100-day moving average of $58.68.

Intel’s 14-day RSI (relative strength index) number is 55.6. The number indicates that the stock isn’t oversold or overbought. Intel’s lower, middle, and upper Bollinger Band levels are $50.92, $56.86, and $62.79, respectively. On Wednesday, the stock closed near its upper Bollinger Band level, which suggests that it’s overbought.

Read Intel Stock: Why Are Analysts Bullish amid the Sell-Off? and Why Intel Stock Looks Attractive amid the Market Sell-Off to learn more.

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