Intel is ‘very ambitious’, but now comes the hard part

The new CEO of Intel Corp. it feels ambitious, and now analysts are wondering if the company can follow its big plans.

CEO Pat Gelsinger recently took over the lead job at Intel INTC,
-0.93%
after a period of failure for the chip giant, he addressed investors on Tuesday to set out what one analyst described as a “very ambitious plan” for his future strategy. His comments indicated that Intel intends to remain an integrated device manufacturer (IDM) while also doing some outsourcing and launching a new foundry service business.

“This is just an execution,” wrote analyst Cowen & Co. Matthew Ramsay. “Given the wrong steps and delays over the last seven years, this is a 100% show-me story. Hopefully the mass outsourcing talks will stop, but Intel still has to prove a way back to competitiveness with TSMC TSM,
-4.17%.

Ramsay raised its price for Intel stock to $ 81 from $ 80, repeating a rating better than that stock.

Opinion: The new Intel CEO is making bold moves in production

Intel shares rose 0.1% in trading on Wednesday morning, although they rose as much as 6.2% earlier in the session.

Bernstein analyst Stacy Rasgon commented that “new CEO Pat Gelsinger can’t be blamed for the lack of vision” and described Gelsinger’s approach to the “all of the above” strategy, even though he still has a bearish view of stocks.

The bull case here remains a “cheap hope” and we assume investors may still have reason to hope, at least for now; At the very least, Pat exudes the enthusiasm and confidence that Intel has been sorely lacking for some time, ”Rasgon wrote. “However, at the same time, the implementation of this plan will be very challenging, and we doubt that the economy will be uglier during the transition; we will see how well the appetite is held when a truer picture emerges. “

He rates Intel shares as bad with a target price of $ 43.

Evercore ISI CJ Muse analyst wrote that “it’s hard not to see stocks continue to grind more,” given that “the burden of proving Intel’s negativity seems to have shifted to the bear camp,” and Intel is expected to benefit from government assistance.

According to Musa, the “clear winners” from Intel’s news are chip equipment companies, because they will benefit from Intel’s plans to increase their consumption.

“While the transformation at Intel will take many years to fully develop, what is crystal clear to us is that the increase in spending by Intel, along with capital discussions elsewhere, suggests some advantages from leading foundry players over the CY21 WFE [wafer-fab equipment] (although equipment shortages will be limited to some extent) and then a clear picture of growth in CY22 – is $ 90 billion or more on the table now? ”

Muse has an online rating of Intel shares and has increased its price to $ 75 from $ 68. Ranking ASML Holding NV ASML,
+ 4.36%
as its best choice of chip equipment, followed by Applied Materials Inc. AMAT,
+ 6.23%,,
Lam Research Corp. LRCX,
+ 2.74%,,
and KLA Corp. KLAC,
+ 2.87%

Shares of Applied Materials rose 6.9% in trading on Wednesday, to accelerate the SPX index S&P 500,
+ 0.11%
winners. Shares of ASML rose by 5.7%, while shares of Lam Research rose by 3.9% and shares of KLA by 4.7%.

Intel shares have risen 35% in the last three months, such as the Dow Jones Industrial Average DJIA,
+ 0.59%
increased by 8.5%.

.Source