Erratum. We are replacing our original INTC 3Q09 note from 13th Oct with a correction to Exhibit 1; the rest of the note remains unchanged. ■ Bottom Line. Significant upside to 4Q09 rev and GM could cause concern that inventory is building and GM is peaking, we believe that both views are wrong. While it is tempting to look at INTC's 4Q guidance in terms of cyclical peaks, our analysis suggests that performance is based on structural drivers which are sustainable. We estimate there is over $2.00 of earnings power and believe the stock is poised to be re-rated from cyclical back to growth, and while our official PT is $27, continue to believe in a robust 2010 PC cycle there is upside to $40.
Reiterate OP. We stay Outperform, having raised our PT to $27 (from $24) on October 13, representing a 16.9 P/E multiple to our 2010 est, in-line with its 5 yr avg. of 16.5x.