Intel Corp. (NASDAQ: INTC) is set to release its fourth-quarter financial results after the markets close on Thursday. The consensus estimates from Thomson Reuters call for $0.63 in earnings per share (EPS) on revenue of $14.80 billion. In the same period of the previous year, the tech giant posted EPS of $0.74 and $14.72 billion.
This top chip stock traded sideways all last year and actually closed down from where it started 2015, but with $21 billion of cash on the books, the dividend looks very safe. Intel is one of the companies that is regarded as having among the highest shareholders cash returns, at approximately 8%, though it has lagged high-growth specialty chip stocks.
Intel purchased chip rival Altera last year for a massive $16.8 billion, and the deal finally closed on December 28. Some on Wall Street viewed the deal pessimistically, citing its high cost, aggressive growth assumptions on the part of Intel and the increase in debt. Others feel the addition will help Intel start to move away from its PC dependence. Intel’s acquisition puts it into the traditional fabless market of programmable logic devices. By 2020, 50% of Altera’s product line could be manufactured at Intel facilities.
Intel’s NAND flash memory business has a strong focus on enterprise opportunities. Many on Wall Street think that the company’s new chip, which is a collaboration with Micron Technology, called the 3D XPoint could be primarily In-Memory compute in servers, and its launch should coincide with Intel’s Purley platform server launch in 2016.
A few analysts weighed in on Intel prior to the earnings release:
- Nomura has a Buy rating and set its price target at $42.
- Roth Capital reiterated a Buy rating.
- JPMorgan initiated coverage with an Overweight rating and a $40 price target.
- B. Riley reiterated a Buy rating with a $39.50 price target.
So far in 2016, Intel has outperformed the broad markets, solely because it has not dropped as far. Shares are down about 5% year to date and down 8% over the past 52 weeks.
Shares of Intel were trading at $32.70 Wednesday morning, with a consensus analyst price target of $36.49 and a 52-week trading range of $24.87 to $37.03.
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