What’s Subsequent for Intel Inventory After a Punishing Yr? Some Say to ‘Keep Far Away’

Traders in Intel’s (INTC) inventory have not had a lot to have a good time in 2024, with the shares dropping greater than half their worth. Subsequent 12 months could possibly be difficult too.

Analysts have advised that the appointment of a brand new CEO and modifications to Intel’s turnaround plans could possibly be near-term catalysts for the inventory. However additionally they say that the enterprise challenges dealing with the storied chipmaker might take months—or years—to work by way of.

“The scenario right here appears more likely to preserve getting worse earlier than it will get higher,” Bernstein analysts wrote after the departure of former CEO Pat Gelsinger in early December.

As Intel searches for a brand new CEO, the corporate’s path ahead is more likely to evolve. Gelsinger had been a proponent of holding Intel’s personal manufacturing and contract foundry companies as a part of his turnaround effort. Now analysts counsel a breakup of its operations could possibly be extra possible. (Rumors to that impact sometimes energized Intel’s shares earlier this 12 months.)

In a presentation to traders earlier this month, interim co-CEOs Dave Zinsner and Michelle Johnston Holthaus known as the opportunity of a full separation of Intel’s foundry enterprise an “open query for one more day,” in accordance with a transcript supplied by AlphaSense. 

Shares of Intel completed Monday at $20.20, leaving them down 60% for the 12 months. The PHLX Semiconductor Index (SOX) is up about 22% in 2024; Nvidia (NVDA), which earlier this 12 months changed Intel within the Dow, has greater than doubled in worth.

Wall Road is broadly cautious about Intel’s inventory, with 13 of the 16 analysts tracked by Seen Alpha sitting on “maintain” scores and three with “sells.” Nonetheless, there may be some extent of optimism on the market: Their consensus worth goal, at the moment round $24, represents a roughly 19% premium to current costs.

Financial institution of America analysts wrote earlier this month {that a} breakup might now grow to be extra possible.  The analysts, nevertheless, additionally stated a lot of Intel’s turnaround might nonetheless depend upon the foundry enterprise, set to obtain billions of {dollars} in CHIPS Act funds tied to assembly manufacturing milestones. 

Whereas a breakup may gain advantage shareholders within the quick time period, Wedbush analysts wrote lately, it might fail to resolve Intel’s bigger points in proving its competitiveness, citing the corporate’s “lagging place” in each chip design and manufacturing. 

And Bernstein analysts final week suggested traders to “keep far-off.”

CORRECTION & UPDATE—Dec. 23, 2024: This text has been up to date to replicate newer share worth info and that Intel co-CEOs Dave Zinsner and Michelle Johnston Holthaus gave their presentation to traders earlier this month.