HSBC raises Intel: 'Limited downside but still too early to turn bullish'

Investing.com -- HSBC upgraded Intel (NASDAQ:) from Reduce to Hold successful a enactment Tuesday, citing constricted downside aft a correction successful the stock. 

Since Intel's second-quarter 2024 net release, the banal has dropped astir 26%, portion the scale gained 9%. 

HSBC notes that the banal has present met its people terms of $20, suggesting it is reasonably priced amid ongoing uncertainties.

"We judge the marketplace has priced successful the caller uncertainties relating to the execution of the IDM 2.0 strategy arsenic good arsenic apical absorption attrition with CEO Pat Gelsinger resigning successful December 2024," HSBC analysts stated.

Intel's upcoming fourth-quarter 2024 net are expected to align with marketplace expectations. HSBC forecasts gross of $13.8 billion, wrong the guidance scope of $13.3 cardinal to $14.3 billion, matching the statement estimate. 

However, the outlook for the archetypal 4th of 2025 appears little optimistic, according to the bank. 

HSBC anticipates a 9% quarter-on-quarter gross decline, beneath the statement estimation of a 6% decline, mostly owed to imaginable weakness successful the datacenter segment.

"Going into 1Q25e, we judge determination could beryllium immoderate downside to revenue," the analysts wrote, adding that they expect this to unit Intel's gross margin, which they estimation astatine 38.5%, beneath the statement of 39.1%.

HSBC besides highlighted ongoing concerns astir Intel's foundry strategy. "While we bash admit that the worst seems to beryllium implicit for Intel... it inactive remains aboriginal to person a wide presumption connected its execution starring to wide betterment of the business."

Despite revising their 2025 EPS estimation from $1.19 to $1.04, HSBC maintains a people terms of $20, reflecting constricted downside. "We hold for wide signs of betterment earlier we crook bullish connected the stock," the analysts concluded.