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Wolfe Research bearish on Intel stock amid concerns over startup costs and margins By Investing.com

Wolfe Research bearish on Intel stock amid concerns over startup costs and margins By Investing.com


On Wednesday, Wolfe Research maintained its underperform rating for Intel Corporation (NASDAQ:) stock with a steady price target of $31.00. The firm highlighted concerns about the impact of startup costs and outsourcing on the technology giant’s profit margins through the calendar year 2025 (CY25).

The firm’s analysis pointed out that while Intel’s management expects startup costs to peak in the calendar year 2024 (CY24), these expenses will continue to pose a significant challenge in CY25. Furthermore, the anticipated ramp-up of Intel’s 18A processor production in the second half of 2025 (2H25) is not expected to significantly benefit the profit and loss statement until CY26. This is when a larger volume of processor tiles is projected to transition from external to internal production.

Wolfe Research’s statement underscored that the peak of startup costs and outsourcing pressures in CY24 could lead to some incremental improvement in margins for the following year. However, the firm remains cautious about Intel’s near-term financial outlook due to these ongoing cost factors.

InvestingPro Insights

In light of Wolfe Research’s underperform rating for Intel Corporation (NASDAQ:INTC), InvestingPro data and tips provide additional context for investors. Intel’s current Market Cap stands at $187.05 billion, with a high Price/Earnings (P/E) Ratio of 108.68, which further increases to 116.94 when adjusted for the last twelve months as of Q4 2023. Despite a revenue decline of 14.0% in the same period, the company has seen a quarterly revenue growth of 9.71% in Q1 2023.

Two InvestingPro Tips that stand out are Intel’s expected net income growth this year, which may signal a positive turn in profitability, and its status as a prominent player in the Semiconductors & Semiconductor Equipment industry. The latter is particularly relevant as the company navigates through the startup costs and outsourcing challenges highlighted by Wolfe Research. Additionally, Intel has maintained dividend payments for 33 consecutive years, which could be a sign of the company’s commitment to shareholder returns despite the current financial pressures.

For investors seeking a deeper analysis, there are more InvestingPro Tips available, including insights on Intel’s valuation multiples and profitability predictions. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription for further expert advice. With these insights, investors can better…

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