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Chipmaker Intel Corporation's latest executive shakeup that saw the company announce the replacement of its current chief financial officer (CFO) Mr. George Davis has received approval from investment firm Raymond James in a new analyst note seen by Wccftech. The report continues to take a cautious approach towards the company's future, as it outlines that Intel has a long way ahead of it in terms of retaking its position as the world's leading semiconductor manufacturer. Raymond James is joined by Keybanc, who in its latest coverage of the chip industry has exhibited optimism for Intel's smaller rival Advanced Micro Devices, Inc (AMD) and downgraded Intel to Weight from Overweight.
Incoming Intel CFO Will Set Low Expectations For Company's Cash Flows At Upcoming Investor Day Believes Research Firm
The crux of the one-page research report from Raymond James dedicated to Intel's decision to bring in former Micron CFO Mr. David Zisner as its new CFO after Mr. Davis retires surrounds the challenges facing the new executive as he joins the company at a pivotal time period in its history.
The research firm starts out by outlining that it expects that investors will be appreciative of the new executive due to his popularity in the financial community and his experience in the semiconductor sector. It also suggests that Mr. Zisner is believed to be adept at managing investor expectations, which is a skill that will come in quite handy to Intel in a month as the company heads towards its investor day in February.
Crucially, Raymond James believes that the upcoming event will be the next negative catalyst for Intel's stock. It currently has an Underperform rating for the company and believes that the new CFO will be careful to set low expectations for Intel's cash flow and margins since both will be affected due to the heavy capital expenditure the chipmaker has planned to develop new chipmaking process technologies.
The firm goes on to outline that:
That effect [NEGATIVE INVESTOR DAY CATALYST] will be exacerbated by the likelihood of share loss in the meantime. We think investors understand this directionally, but the magnitude has not yet been quantified. We believe that Zinsner will seek to quantify that at a low enough level so that they don’t need to lower the bar again – but we expect it to be a substantial reset.
It also comments on the AMD and Intel rivalry by stating that:
The problem is, while market dynamics are favorable, given product superiority, we think AMD now has the ability to take as much share as they have the ability to produce, and significantly more capacity is becoming available to them.
Finally, Raymond James concludes the note by sharing that while Mr. Zisner's appointment is a positive development, it will not be central to solving Intel's primary problem of being left behind in the technological race for the latest semiconductor processes. It believes that until Intel catches up to the industry, the chipmaker will continue to lose market share.
Raymond James is joined by Keybanc who also shares its opinions on Intel in a fresh analyst note that downgrades the company's stock to Sector Weight from Overweight due to Keybanc's belief that there are "limited catalysts" to the stock. Picked up by Barron's, the research note outlines that the fair value for Intel's stock price, which closed at $55 yesterday, is $57. Additionally, it goes on to state that while recent management initiatives are comforting, the payout from Intel's mega strategies, such as IDM 2.0 and IFS, will take time to materialize.
Keybanc is however highly optimistic for AMD's future, as the latest note is full of praise for the smaller chip designer. AMD has continued to deliver consecutive quarterly revenue growth for more than a year now, and Keybanc not only upgrades the stock's rating to Overweight from Sector Weight but also sets its price target to $155, marking for a 17% upside from yesterday's $132/share closing price.
KeyBanc called AMD one of the “most compelling data center growth stories given its exposure to cloud and continued market share gains,” and said it was “one of the most compelling server growth stories in the semiconductor industry given its outsized exposure” to cloud service providers vs. enterprise.
The firm also cites confidence in AMD's proposed takeover of Xilinx, Inc, believing that the deal will solidify the company's future portfolio strength. The deal, which was expected to close by the end of last year is now expected to clear the final hurdle of Chinse regulatory scrutiny by the end of this year's first quarter.
