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Intel Corporation Message Board

  • lucifer_nuff lucifer_nuff Dec 10, 2012 11:36 AM Flag

    Intel: Miller Tabak Cuts Target to $23; PC Data Suggest Weak December

    December 10, 2012, 10:22 A.M. ET
    Intel: Miller Tabak Cuts Target to $23; PC Data Suggest Weak December

    By Tiernan Ray

    Shares of Intel (INTC) are down 7 cents, or 0.4%, at $20.09 after Miller Tabak’s Brendan Furlong this morning reiterated a Neutral rating on the shares and cut his price target to $23 from $25, after trimming his estimates for 2013 for revenue and gross profit margin, warning that data on the “build rate” of original design manufacturers (ODM) of PCs are “softer than expected” for December, and that “Weaker demand into a seasonally strong quarter is not a good sign for Intel.”

    Total ODM revenue appears to have dipped 5% in November, he writes, whereas “historically November has seen positive trends before a seasonal decline in December. ”

    Adds Furlong, “On a quarterly basis, year over year growth continues to be very weak.” He’s modeling 5% total quarter-to-quarter growth for the December quarter, down from 7% growth in the same period a year earlier, and a decline of 8%, down from a 1% decline in 2011′s Q4.

    Despite an attractive valuation and dividend, Furlong advises holding off on the shares until PC data reach a floor:

    Intel is suffering from a double headwind of negative PC market growth and excess inventory. We see these issues lasting into 2013. Until the company gets inventory under control, so that gross margins can put in a bottom, we do not see investors rushing to buy the stock. We think the company can eventually get inventory under control but it is tough to tell when the rot stops in the PC market. The stock has declined significantly in the last several months and valuation appears to be attractive. The dividend is also attractive at these price levels. While the valuation and dividend are attractive, we are maintaining our Neutral stance on the shares until we see some signs of stabilization in the PC and server markets.

    For the current quarter, Furlong cut his estimates for Intel to $13.3 billion and 43 cents a share in profit from a prior $13.5 billion and 45 cents. That is below the Street consensus of $13.54 billion and 45 cents a share.

    For 2013, he models $52.9 billion and $1.70, down from a prior $54.4 billion and $1.93. That is below the consensus $54.36 billion and $1.96.

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