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What You Can Expect from Intel’s Q2 Earnings

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On Tuesday, Intel stock fell 0.7 percent and closed at $60.70. The stock was trading 12.4 percent below its 52-week high of $69.39. Meanwhile, the stock was trading 39.1 percent above its 52-week low of $43.63. At the closing price on Tuesday, Intel stock had a market capitalization of $257.0 billion.

What can investors expect from Intel’s second-quarter results? The company will likely release its second-quarter earnings results on Thursday after the market closes.

Intel’s Q2 earnings expectations

Wall Street analysts expect Intel to post sales of $18.6 billion in the second quarter—a growth of 12.4 percent YoY (year-over-year) compared to $16.5 billion in the second quarter of 2019. Also, analysts expect the company to post an adjusted EPS of $1.11 in the second quarter compared to $1.06 in the second quarter of 2019. In the quarter, the company will likely show strength in its PC business amid the work-from-home shift.

Analysts expect Intel’s revenues to rise by 2.6 percent YoY in 2020 to $73.9 billion. The sales will likely rise by 0.3 percent YoY in 2021 to $74.1 billion. The adjusted earnings will likely fall by about 1.2 percent YoY in 2020 to $4.81 per share. However, the profits could rise by 1.2 percent YoY to $4.87 per share in 2021.

Analysts’ recommendations for Intel

Among the 44 analysts tracking Intel stock, 15 recommend a buy—down from 16 in the last month. Twenty-three analysts recommend a hold—down from 24 in the last month. Six analysts suggest a sell—up from five in the last month. Analysts have an average target price of $62.87 on Intel. The target price implies a return of 3.6 percent based on the closing price of $60.70 on Tuesday. The consensus target price for the stock has fallen from $63.52 in June—a reduction of 1.0 percent.

Earlier this month, Goldman Sachs analyst Toshiya Hari downgraded Intel stock from neutral to sell. Hari also decreased his target price on the stock to $54 from $65. According to a report from TheFly, “Recent industry checks indicate a slowdown in PC builds in the second half of 2020 and continued share loss for Intel in the client and server central processing unit markets.”

Peer comparison

Advanced Micro Devices will likely report its second-quarter earnings results on July 28. In the second quarter, analysts expect the company’s sales to rise 21.3 percent YoY to $1.86 billion from $1.53 billion. They also expect AMD to post an adjusted EPS of $0.16 during the quarter compared to $0.08 in the same quarter last year.

Qualcomm plans to report its earnings results for the third quarter of fiscal 2020 (quarter ended June) on July 29. For the third quarter, analysts expect Qualcomm to report revenue of $4.8 billion—a 1.8 percent reduction YoY from $4.9 billion. Also, they expect the company to post an adjusted EPS of $0.70 compared to $0.80 in the same quarter last year.

As of Tuesday, AMD and Qualcomm had average broker target prices of $54.41 and $94.89, respectively. These figures imply -4.5 percent and 2.8 percent returns, respectively, over the next 12 months.

Technical analysis

Based on the closing price on Tuesday, Intel stock was trading 2.5 percent above its 20-day moving average of $59.21. The stock is also trading 0.5 percent above its 50-day moving average of $60.38 and 4.6 percent above its 100-day moving average of $58.05. Intel’s 14-day relative strength index number is 56. The number indicates that the stock isn’t oversold or overbought.

Intel stock has a lower Bollinger Band level of $57.46, while its middle Bollinger Band level is $59.15. On Tuesday, the stock closed near its upper Bollinger Band level of $60.85, which suggests that it is overbought.

Intel stock has risen as much as 0.7 percent in the pre-market session today as of 9:24 a.m. ET. The S&P futures fell 0.15 percent and the Dow futures fell 0.21 percent. After Intel's first-quarter earnings, 23 of the 44 analysts recommended a hold.

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