Intel downgraded after latest earnings reveal major challenges: Argus
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Intel (NASDAQ:INTC) was downgraded to Hold from Buy by Argus following second quarter financial results that revealed serious challenges for the hardware company.
“Intel posted 2Q24 revenue and non-GAAP EPS that badly missed consensus estimates,” said Argus analyst Jim Kelleher, in a Tuesday note. “The company announced an extensive restructuring and suspended its dividend.”
Intel announced it was slashing its workforce by about 15% as it seeks to reduce cost by $10B. The stock has plunged 34% in the five days since its second quarter earnings call. But concerns arose well before the latest financial results, as shares have sunk 60% year to date.
Despite these issues, Argus is only downgrading the stock to Hold for its 12-month rating. It’s long-term, five-year rating still indicates Intel as a Buy.
“We believe Intel faces a long road to recovery,” Kelleher said. “As it seeks to maintain its aggressive node and product roadmap in Client and Data Center, Intel likely faces an extended period of low- to no-profit quarters even on the planned reduced cost base. There is no guarantee Intel will ascend to past heights, given intense competition from AMD (AMD), Nvidia (NVDA), Apple (AAPL), Qualcomm (QCOM) and others.”
Intel’s nascent Foundry business lost $2.8B during the second quarter.
“The company acknowledged that Intel Foundry is several years away from sufficient merchant volume to achieve profitability,” Kelleher added. “We expect this business to lag until Intel commercializes its Intel 3 process nodes.”
Intel shares have made wild swings up and own over the past several years. It increased 90% in 2023 after dropping 49% in 2022, and remained relatively flat in 2021 after falling 17% in 2021.
Its current stock price is the lowest it’s been since September 2011.
Intel has a Hold rating from Seeking Alpha analysts, Wall Street analysts and Seeking Alpha’s Quant system, which regularly beats the market.