Semiconductor Intel (NASDAQ: INTC)
has certainly had a tough 2020. They’ve ceded ground to top competitors
, lost investor’s confidence, and watched their shares fall nearly 40% from decade highs to where they’re trading now. Things were already shaky for what was once the apple of Silicon Valley’s eye as spring turned to summer and two poor earnings reports have since further compounded their pain.
They’ve watched upstart Advanced Micro Devices (NASDAQ: AMD) eclipse them in the technology race, their data-centric revenue is in free fall when it should be growing, and there have been worrying delays in their R&D pipeline.
The stock is trading at the same prices it spent much of the year 1999 in and many on Wall Street have thrown in the towel. As Bank of America summed up after Intel’s Q3 earnings in October, there is no ‘easy fix’ for the headwinds the company is facing and management seems stuck in a rut. Those comments came as part of a downgrade from the bank, where they also gave a price target of $45 to the shares. But given that’s where shares are now trading, is there a case for the long side again, with things as bad as they’ve ever been?
In the last week or so it looks like some of the big money is starting to see beyond the recent pain points to brighter days ahead. On Monday it was reported that Greenlight Capital, David Einhorn’s fund, has opened a long position in Intel shares, a move that is sure to spark some fresh interest on the bull side. Mizuho Securities have also recently reiterated their Buy rating and kept their $60 price target on shares. Fresh news of delays with some product launches aren’t causing them much concern, and in a note to clients last week they said it “wasn’t as bad as feared and while INTC could potentially have more qualification issues given the significant 10nm platform change (versus prior 14nm) we do not think the pushout or delays is out to 3Q."
Prior to all this at the start of November, Northland were out with a fresh upgrade to the stock, moving it out of the bearish zone from Underperform to Market Perform. While it’s still not a bright shiny buy signal, it suggests the sell-side is starting to think the recent bout of selling has reached its zenith and much of the downside is well baked into the share price. Indeed, were the worst to happen, Northland’s Gus Richard believes the breakup value of Intel’s individual parts, like Mobileye and Altera, exceeds the enterprise value.
Brighter Days Ahead?
Aside from the shift in sell-side sentiment, there have been some much needed good news headlines too of late. Earlier this month it was announced that Dish Network (NASDAQ: DISH) had picked Intel as their vendor of choice to support their 5G rollout. It was a much needed win for the Santa Clara headquartered company and hopefully not the last one they get this side of 2021.
Investors thinking about getting involved will still need to pinch their noses and be prepared to play the long game here. 2020 has been one of the company’s worst years but if management can steady the ship then there’s a big recovery play on the books. Intel has gone through troughs like this many times before and still managed to turn things around. In terms of entry points, shares are bouncing along multi year support right now in the $43-44 zone where buyers have consistently been found on all the stock’s visits down here since 2017.
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