Intel Earnings: Even with PC wave, rebound in the market seems far outside

Intel Corp is submerged with expectations of a hoped-for turnaround in the semiconductor market, but even unexpected growth in personal computer sales will hardly show a rebound.

Since Intel

INTC, + 1.50%

reports third-quarter earnings on Thursday after the market closed, both revenue and revenue are expected to fall last year, but less than other companies in it are struggling. Cowen analyst Matthew Ramsay said he expects the sector to be mostly in line with estimates requiring chip-related companies' earnings to fall more than 30% and sales to fall more than 1[ads1]1%, as a recovery for the sector is likely to be squeezed out to 2020.

Despite drastic declines in economic development, chip stocks are up around 40% for the year, so Ramsay suggests investors selectively grow on chip stocks in the short term and look for specific news. Along with how trade with Huawei and China affects the industry, Ramsay said investors need to look at how data center consumption is recovering and cut out the noise for how customs rates increased PC sales. Analysts pointed to another quarter of growing PC shipments, prompted by fears of higher tariffs as a relevant factor.

"We expect Intel to print up to Q3 while taking a defensive competitive tone and showing its silicon width," Ramsay said. "Q3 should be strong on PCs, but what about the back of this inventory?"

What to look for

Revenue: Of the 37 analysts surveyed by FactSet, Intel is expected to post adjusted earnings of $ 1.23 per share, down from $ 1.40 a per share reported in the previous quarter, but up from $ 1.17 a share expected at the beginning of the quarter. Estimize, a software platform that uses crowd sourcing from hedge fund managers, brokers, buy side analysts and others, requires $ 1.27 earnings per share.

Revenue: Wall Street expects $ 18.05 billion in revenue from Intel, according to 35 analysts polled by FactSet. This is down from the $ 19.16 billion reported in the quarter the previous year, but up from the $ 17.89 billion forecast at the beginning of the quarter. Estimate expects revenue of $ 18.17 billion.

Data Center Group, or DCG, expects revenue to fall 8.5% to $ 5.62 billion, according to FactSet data, while Intel's largest segment – client computing, the traditional PC group – is expected to fall 6.2% to $ 9.6 billion from the previous year. Revenue for memorable solution revenues is expected to fall 10.2% to $ 970.7 million, compared with the previous year. "Internet of Things," or IoT, revenue is expected to rise 19% to $ 1.09 billion.

Equity Movement: Intel shares have been flat since the company's recent earnings report from Monday's close. By comparison, the Dow Jones Industrial Average

DJIA, + 0.21%

has declined 1.2%, the S&P 500 index

SPX, + 0.69%

has advanced 0.1%, the technically heavy Nasdaq Composite Index

COMP, + 0.91%

has decreased 0.9% and the PHLX Semiconductor Index

SOX, + 1.88%

has increased by 1.6% during that time.

Of the 42 analysts covering Intel, 13 have buy or overweight, 20 have hold rating and nine have sold or underweight ratings, with an average price target of $ 54.20, or 4% above Monday's close.

What analysts say

Instinet analyst David Wong, who has purchased Intel, expects the increase in PC sales to support inline results for the company's sales.

Oppenheimer analyst Rick Schafer, who has a market performance rating on Intel, is also seeing results online, but expects "a somewhat cautious tone given persistent macro / trade uncertainty."

"In key end markets, server improves to 2H / 2020 with push growth offsetting business decline," Schafer says. "PC demand seems to be on track, even though CPU shortages related to INTC 10nm provide a drag. "

Stifel analyst Patrick Ho is looking to see if Intel boosts its $ 15.5 billion investment plans." degree of 14nm and 10nm capacity to meet this need, "said Ho.

"In addition, our controls suggest that Intel is aggressively pushing for the next generation 7nm node, which it still targets for volume production in 2021," said Ho. "Admittedly, we are a little cautious about the time for this future hub disaster, but we believe that driving what we expect will be another major capital year in 2020. "