Mohacsy's Safe Portfolio Member Forum

[dexprs]

Tech Trader Daily: Intel: A Raft of Good Things Starting Next Year, Says Barclays -- Barron's Blog
DOW JONES & COMPANY, INC. 2:46 PM ET 11/13/2017
Symbol Last Price Change
INTC 45.74up +0.16 (+0.35%)
NVDA 212.45down -3.69 (-1.71%)
XLNX 72.31up +0.44 (+0.61%)
QUOTES AS OF 03:56:23 PM ET 11/13/2017
Intel's (INTC) back on track, declares Barclays chip analyst Blayne Curtis today, reiterating his Overweight rating, and raising his price target to $55 from $45, with things like greater rigor around spending and the fading of competition from Advanced Micro Devices ( AMD) making 2018 look bright.

Intel (INTC) stock today is up 20 cents at $45.78.

Curtis goes through a few things that have already proven him right in upgrading the stock last year, as he sees it. The personal computer market has improved, he notes, with shipments down this year only "low single digits," better than feared. The data center market has continued to grow, and operating profit in the business was 46% last quarter, he notes, which disproves some worries that more sales to cloud computing customers would crimp profits.

Intel's (INTC) " Purley" processor will shine in data centers as "competitive threats (AMD and ARM) should fade," he declares, without going into detail.

But there's more stuff coming, he declares.

Intel's (INTC) finally going to be able to produce its 10-nanometer chips next year, in the second half, after delays, and that will offer "efficiency and performance advantages versus competing 12/14 nanometer chips," he writes. That will be followed by 7-nano chips in 2020.

Then there's the Mobileye acquisition from earlier this year, which should see sales "accelerate through 2019 as wins starting shipping for revenue."

Then there's its business supplying Apple ( AAPL) with baseband modem chips for the iPhone: That could get another lift, given Intel(INTC) "should have a working CDMA part in 2018 and could take outsized share if not all of AAPL IPX2 production."

And then there's the market for artificial intelligence, where Intel's(INTC) chips can be competitive versus GPUs from Nvidia(NVDA) and FPGAs from Xilinx(XLNX) :

INTC should maintain a strong Inference position long term as they have an unappreciated advantage vs. GPUs/FPGAs. While a GPU can show performance advantages vs. a CPU in a controlled and favorable setting, a CPU offers a greater ease of use and better real world performance in racks, which also must perform many other functions in addition to inference. NVDA is clearly not a company to underestimate here but Intel(INTC) has a better shot at maintaining a large portion of this workload than they get credit for. Skylake improved Inference performance by 2x and we expect large improvements in future generations as that workload takes off.

And he likes the company's newfound discipline about Intel's(INTC) spending:

Intel (INTC) has drawn a line in the sand with its target to get spending to 30% of revenue by 2020 but we think the changes here are greater than that. There is now a greater focus on returns on their investments and we see the potential for further savings vs. that target. In areas where the spending is already started such as modems we hope to see a discipline if targets are not met. Earnings are already growing faster than revenue but ultimately for the stock to work further investors will also need to see if Intel(INTC) can also grow FCF in the face of increasing capex burdens.

More at Barron's Tech Trader Daily blog, http://www.barrons.com/tech-trader


(END) Dow Jones Newswires
11-13-171446ET
Copyright (c) 2017 Dow Jones & Company, Inc.