What’s Subsequent for Intel Inventory After a Punishing 12 months? Some Say to ‘Keep Far Away’

Buyers in Intel’s (INTC) inventory have not had a lot to rejoice in 2024, with the shares shedding greater than half their worth. Subsequent 12 months may very well be difficult too.

Analysts have urged that the appointment of a brand new CEO and adjustments to Intel’s turnaround plans may very well be near-term catalysts for the inventory. However in addition 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 prone to hold getting worse earlier than it will get higher,” Bernstein analysts wrote after the departure of former CEO Pat Gelsinger earlier this month.

As Intel searches for a brand new CEO, the corporate’s path ahead is prone to evolve. Gelsinger had been a proponent of retaining Intel’s personal manufacturing and contract foundry companies as a part of his turnaround effort. Now analysts recommend a breakup of its operations may very well be extra seemingly. (Rumors to that impact sometimes energized Intel’s shares earlier this 12 months.)

In a presentation to traders final week, interim co-CEOs Dave Zinsner and Michelle Johnston Holthaus known as the potential of a full separation of Intel’s foundry enterprise an “open query for an additional day,” based on a transcript supplied by AlphaSense. 

Shares of Intel completed Friday at $19.52, leaving them down 61% for the 12 months. The PHLX Semiconductor Index (SOX) is up about 19% in 2024; Nvidia (NVDA), which earlier this 12 months changed Intel within the Dow, has greater than doubled in worth.

Wall Avenue is broadly cautious about Intel’s inventory, with 13 of the 16 analysts tracked by Seen Alpha sitting on “maintain” rankings 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 23% premium to current costs.

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

Whereas a breakup may benefit shareholders within the brief 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 earlier this week suggested traders to “keep far-off.”