Intel’s stock price rally checked by weak earnings

[MongiIG]

The surge in Intel’s stock price was hit by a weak outlook in the latest earnings report, though the longer-term trend is still intact.

Source: Bloomberg

 

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 Written by: Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Friday 26 January 2024 15:53

Intel drops in wake of earnings

Intel Corporation experienced a significant drop in its stock value, plunging over 10% during premarket trading after the semiconductor giant disclosed its fourth-quarter (Q4) results. While Intel surpassed earnings expectations for the quarter, its forward-looking guidance disappointed investors, signalling potential headwinds for the company.

Weak outlook pressures the shares

In a challenging market, Intel forecast Q1 adjusted earnings per share (EPS) of $0.13, a stark contrast to the $0.34 anticipated by analysts. Furthermore, projected revenue for the quarter is estimated to be between $12.2 billion and $13.2 billion, which is notably lower than the anticipated $14.2 billion.

This conservative outlook has raised concerns among traders and investors about the company's near-term growth prospects.

Despite the cautious outlook, Intel's Q4 performance was robust, with adjusted EPS of $0.54, ahead of the expected $0.44. Revenue was also higher than expected, at $15.4 billion.

Intel's Client Computing Group, however, reported a successful quarter with sales amounting to $8.8 billion, surpassing the $8.4 billion forecast by analysts and marking a 33% increase from the previous year. This performance suggests that Intel continues to hold a strong position in the personal computing market.

The company is also making strides in its strategic shift to become a foundry for other chipmakers. Although the Intel Foundry Services division fell short of analyst expectations, generating

$291 million in revenue as opposed to the predicted $ 43 million, this initiative represents a long-term investment in Intel's future as a diversified semiconductor industry leader.

Intel stock price – technical analysis

Following their solid rally over the past year or so, Intel shares have slid through their steep October-to-January uptrend line and trade back below their 200-week simple moving average (SMA) at $44.92 which now acts as resistance, together with the 55-day SMA at $45.01 and the late-November high and mid-January low at $45.34 to $45.65.

Source: TradingView

While this resistance area caps, downside pressure should be maintained with the December low at $41.17 representing a possible downside target.

Source: TradingView

For the bulls to be back in control, not only would Friday’s price gap need to get filled but a rise above Thursday’s high at $50.30 would also need to occur. This currently looks highly unlikely, though.

 

 

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