Major Bank Ratings | UBS: Raises Intel Target Price to $49, Expects Mixed but Gradually Improving Outlook This Year

Glonghui, January 15th｜UBS released a report, expecting Intel’s fourth-quarter performance to rise due to strong demand for personal computers and servers, and believes that market expectations for the company’s guidance for the current fiscal quarter ending at the end of March are still reasonable. The bank expects Intel’s outlook for this year to be mixed but gradually improving, as the current quarter should be the most severe period for capacity issues. Historical experience shows that rising memory prices will suppress some of the short-term positive momentum in the personal computer market. The bank raised Intel’s target price from $40 to $49 and maintained a “Neutral” rating. The bank expects that during the earnings release, Intel will discuss gross margin more extensively (expected to fall below the 40%-60% range, with the bank forecasting around 38% for the full year), total/net capital expenditures (the bank forecasts approximately $19 billion/$12 billion, both slightly increasing), as well as operating expenses of $16 billion in line with previous guidance. More crucially, the narrative surrounding foundry business is gradually improving, with the bank believing that several potential customers are in talks for cooperation on the 14A process, including Nvidia in the gaming sector, as well as potential customers such as Google, Broadcom, and Apple.