Important points
Investors in Intel (INTC) stock don’t have much to cheer about in 2024, with the stock price down more than half. Next year may be another challenging year.
Analysts have suggested that the appointment of a new CEO and changes to Intel’s turnaround plan could be a driver for the stock price in the short term. But they also say the business challenges facing the storied semiconductor maker could take months or even years to resolve.
“Things here are likely to continue to get worse before they get better,” Bernstein analysts said after former CEO Pat Gelsinger left the company earlier this month. .
As Intel searches for a new CEO, the company’s future path could evolve. Mr. Gelsinger had advocated retaining Intel’s own manufacturing and contract foundry operations as part of the restructuring effort. Analysts are now suggesting that the company’s business may be more likely to be split. (Rumors of that impact even buoyed Intel stock earlier this year.)
In an investor presentation last week, interim co-CEOs Dave Zinsner and Michelle Johnston Holthaus discussed the possibility of a complete separation of Intel’s foundry business, according to a transcript provided by AlphaSense. “It’s an open question for another day,” he said.
Intel stock ended Friday at $19.52, down 61% for the year. The PHLX Semiconductor Index (SOX) will rise approximately 19% in 2024. Nvidia (NVDA), which replaced Intel as a Dow stock earlier this year, has more than doubled in value.
Wall Street is broadly cautious about Intel stock, with 13 of the 16 analysts tracked by Visible Alpha giving it a “hold” rating and three giving it a “sell” rating. Still, there is some optimism. Their consensus price target is currently around $24, representing a ~23% premium to recent prices.
Analysts at Bank of America wrote earlier this month that a breakup was becoming more likely. But analysts also said much of Intel’s turnaround could still depend on its foundry business, which is set to receive billions of dollars in CHIPS Act funding tied to meeting manufacturing milestones. Ta.
Analysts at Wedbush recently said that while a split could benefit shareholders in the short term, Intel’s “laggard” position in both chip design and production wrote that it would not be able to solve the larger problem of proving its competitiveness.
And Bernstein analysts advised investors to “stay their distance” earlier this week.
