Here’s what major analysts are saying about Intel before its earnings report after the bell

Increased competition, a slowing China economy, and uncertainty about the next permanent CEO are a just a few of the things analysts will be watching out for when Intel reports after the bell.

The company, under interim CEO Bob Swan, is undergoing a transformation to become a more data focused company. At the same time, the company has had to deal with the uncertainty surrounding the ongoing U.S.-China trade war but Intel shares have held up nicely over the past 12 months, rising more than 5 percent. The VanEck Vectors Semiconductor ETF (SMH), meanwhile has fallen more than 15 percent.

KeyBanc analyst Weston Twigg noted that, “..With the semiconductor industry facing a number of headwinds, including a slowing Chinese economy, soft smartphone sales, softening auto demand, slowing hyperscale demand, a lingering government shutdown, and ongoing trade war uncertainty, Intel has remained in a strong position relative to peers, with its own supply shortages likely insulating it from headwinds.”

Still with all these uncertain factors, many analysts are waiting for more info until they say buy the stock.

Here’s what the others watching for:

“We see risk of modest downside to CY19 expectations and are lowering our March-qtr and CY19 estimates… INTC stock has held up well through the current correction as investors focus on attractive valuation and strong DCG trends… We think 2019 will be a tough year given multiple headwinds that are stacking up for INTC: 1) we see risk that as manufacturing bottlenecks alleviate there will be a scenario where large OEMs have extra CPU inventory that needs to be burnt off, resulting in softer than seasonal H1, 2) DCG – After a robust 2018, we see a slowdown from a confluence of slowing hyperscale spend, enterprise IT deceleration and tough ASP compares, 3) memory will likely prove to be challenging on profitability in 2019, and 4) AAPL-driven modem business could magnify the seasonal downtick in March-qtr. Net/Net: We see risk of modest downside to CY19 expectations and are lowering our March-qtr and CY19 estimates to below current Street expectations…”

“For the March quarter, we model for revenues to come in at $16.56bn (down 12.9% q/q)… In the quarter, we expect Client Computing segment to decrease 15.7% q/q driven by desktop units down 15% q/q with ASP flat and notebook units down 13% q/q with ASP up 1.0% q/q… In addition, we model Data center to decline 13.4% q/q. We expect EPS to come in at $0.98, slightly below the street at $1.01… We see three key debates for Intel, and mixed outcomes – 1) shorter term, do they have to guide down around cloud digestion and an end to client microprocessor shortages? We think that they do, and we are below consensus for 1q. 2) Can they compete successfully with AMD given the delay in process technology? We think that they can, as the AMD timeframes for 7 nm (2h19) now lines up closely with Intel’s 10 nm, and allow them to formulate a response in servers; and 3) Will the new CEO improve capital allocation and focus? While it’s hard to answer this conviction without insight into who that CEO will be, we see substantial opportunity for improvement, around the M&A strategy, subscale NAND business, heavy investment into wireless, and overall high discretionary spending…”

“We expect INTC to report C4Q Rev/EPS at least IN LINE with CS/Street of $19.0bn/$1.22 and the midpoint of Company’s guidance for Rev of $19.0bn +/- $500m and EPS of $1.22. Note C4Q Rev is expected down ~1% q/q below seasonal of up ~3% q/q…We expect INTC to guide C1Q Rev to a range of $17.4bn +/- $500m and EPS of $1.00 +/- $0.05 modestly ABOVE CS of $17.2bn/$0.95 but mostly IN LINE with Street of $17.4bn/$1.01… We expect order strength to remain strong amidst continued CPU shortages – and while there may be an element of double-ordering that may create issues later in CY19, we suspect shortages will have a positive bias on NT Rev… We expect Rev guided down 8-9% versus seasonal of down 8.0% q/q, CS of down 9.5% and Street of down 8.5% q/q…”

“For Intel, we are in-line for Q4 ($19.0B/$1.22) and a bit below for Q1 ($17.2B/$0.99 vs consensus $17.4B/$1.01)… We reduce our 2H19 estimates somewhat today, and are below consensus for the full year ($72.2B/$4.45 vs Street $73.2B/$4.53)… INTC has already given some margin guidance for 2019, and there is an (as-yet unknown) revenue growth assumption embedded therein… While our new model still has the company growing (slightly) YoY, we believe the growth trajectory remains open for debate, with PC MPU over-shipment (pull-forward in the wake of supply constraints?) evident in recent quarters, datacenter headwinds (tough compares, potential cloud slowdowns, unusual recent enterprise strength, and competition) building, an AAPL supply chain (which INTC is now exposed to) under pressure, and a NAND pricing environment that looks horrendous… And structural challenges of course remain (including the state of the 10nm ramp, gross margins and capex into next year, and of course the CEO search) and will likely be top of mind for investors into the call… Intel’s stock has held up relatively well since their last earnings (optically cheap on EPS though not necessarily on FCF, and with less of the broad auto/industrial exposure that has had investors more worried lately)… But we see risks (both tactical and structural) building as we move through this year… “

“We expect in line 4Q results, with minor downside risk, and we see increasing risk of disappointing 1Q guidance as most datapoints have gotten incrementally worse since last earnings period… With the semiconductor industry facing a number of headwinds, including a slowing Chinese economy, soft smartphone sales, softening auto demand, slowing hyperscale demand, a lingering government shutdown, and ongoing trade war uncertainty, Intel has remained in a strong position relative to peers, with its own supply shortages likely insulating it from headwinds… However, we expect headwinds to mount in 1Q as datacenter demand likely continues to slow and Intel’s new Apple modem business likely declines amid soft demand; 1Q is also typically a seasonally soft demand period, adding further risk if compounded by macro softness… We currently project Intel’s 1Q revenue to decline a relatively-seasonal 8%…”

“While there are many mitigating factors (both good and bad), we expect generally in-line 4Q18 results and in-line (to modestly weaker) 1Q19 and 2019 guidance… Entering the quarter, we note evidence of elevated PC channel inventory (Intel CPU sales outpaced PC sell-through by +5%/+7% in 2Q18/3Q18), making results/guidance more difficult to handicap. While Taiwanese ODM checks and IDC/Gartner PC sell-through point to modest 4Q18 PC unit upside, lower PC ASPs (PC-SIGnals) are likely to offset… Additionally, Apple weakness weighs ($100 million impact?)… DC checks appear in-line, although we note some negative outliers… 4Q18 EPS should upside as we expect Intel to best their (sandbagged?) 62% GM guidance… We reiterate our Positive rating and $58 price target, reflecting ~13x our 2019 adjusted EPS estimate (EV/NOPAT), as we expect Intel to fare better than most this earnings season…”

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