■ Bullish Tone at Analyst Day. At its investor day at its Santa Clara, CA HQ today Intel articulated a 10%+ revenue/EPS growth strategy centered around core PC (consumer, notebooks, servers) and new products (embedded, smartphones, CE) while also raising its normal gross margin range to 55-65% (from 50-60%). We remain structurally bullish on global PC penetration growth supportive of 20%+ long-term PC unit growth, servers, enterprise client refresh, and a credible smartphone strategy driving $2+ earnings power. ■ Product Cycles Driving 10%+ LT Growth; 2Q Trending In-Line. INTC noted that consumer notebooks (PCs moving from /household to /person), servers (TAM expansion into Unix, storage, embedded), tablets and smartphones were likely to drive 10%+ revenue and EPS growth over the next 5 years. Current 2011 CS/Street estimates of +5% growth in 2011 are probably too low, and higher growth could result in 20-25 cents upside to current CS/Street EPS est. of $2.10/$1.97. Consistent with our thoughts on noise around April month Taiwan data points, INTC re-iterated that 2Q was trending to guidance (-5% to +3% q/q); CS/Street are at the mid-pt or down 1% q/q. ■ Gross Margin Targets Raised. INTC raised its normal GM range to 55%-65% in 2010-13 from lower weighted average die-sizes (integrated MPU+graphics, Atom for low-end), cost appropriate products by segment (vs. prior waterfall), better inventory management (hubbing, 5-6 wk cycle times), and a strong product line-up. Two headwinds to 1H11 GMs – 22nm start-up costs (300bps) and 32nm Sandybridge ramp (100bps). ■ 45nm SoCs Now; 32nm in 2011. Intel highlighted that its first 45nm SoC, Moorestown, with graphics and video cores in-addition to the Atom/x86 core, had power consumption in-line with today’s tablets and hi-end smartphones. Intel deferred discussion on customer products till Computex (1-4 June). INTC’s expected introduction of power/leakage optimized 32nm SoC mfg process with Medfield (2H11) should result in entry into mainstream smartphones. ■ Reiterate OP. Our $32 PT represents a 16.5x P/E multiple to our $1.93 EPS 2010 EPS est. vs. 5 year NTM average of 17.6x. Given the upward bias to topline growth this cycle, our $2+ earnings call could begin to look more like $2.50+.
Well the way the stock sold off yesterday afternoon it does not appear that the "positives" they articulated were perceived as positive. Ran up nicely in the an then was sold off hand over fist. Does not sound like upgrade is imminent
Yesterday's action didn't mean much, given the market's hangover from Monday. There were a number of new items revealed during analyst day that will serve to put floor under this stock and prompt new buying for the next runup around earnings.