Why Shares Of Intel Are Down By 6% Today?

Intel Video 23.04.21.

Intel Stock Declines After The Release Of Q1 2021 Report

Shares of IntelĀ found themselves under strong pressure after the company released its first-quarter results. Intel reported revenue of $19.7 billion and GAAP earnings of $0.82 per share, beating analyst estimates on revenue and missing them on earnings.

The company increased its full-year 2021 guidance. This year, Intel expects to record GAAP revenue of $77 billion and GAAP earnings of $4.00 per share. On a non-GAAP basis, Intel expects to report earnings of $4.60 per share, mostly in line with the analyst consensus of $4.58 per share. Analysts expect that Intel will report earnings of $4.67 per share in 2022 so the stock is trading at less than 13 forward P/E after today’s sell-off.

Interestingly, improved guidance failed to provide support to Intel shares as traders focused on the company’s potential problems with the plan to expand its foundry capability. Some analysts, including Bank of America, believe that this move will be expensive and may put pressure on earnings.

What’s Next For Intel?

Intel stock had a rough 2020, and it failed to return to pre-pandemic levels despite strong demand in the semiconductor space due to the company’s internal problems.

This time, the market focused on the cost side of the foundry expansion story which served as a bearish catalyst for Intel shares. The stock is trading at attractive valuation levels but it remains to be seen whether traders will rush to buy the dip.

Rising capex levels may put pressure on the company’s earnings performance, and it would be hard to justify higher P/E multiples if earnings growth is limited. In addition, the company’s recent history of problems may also put some pressure on valuation. Most likely, Intel shares will need additional catalysts to get back to the previous upside trend.

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