--> INTC traded close to $28 in the after hours (a ~2 year high) but has since pared those gains; the stock just broke below the unchanged level, now at $26.65.
Intel: Color on Quarter
- RBC notes good results and stronger guide given GMs (lower start-up costs and volumes). While FY14 guidance of GM is revised slightly higher to 61% (prior 60%), OpEx is also guided higher. They believe that JunQ GMs should represent the peak through the next few quarters, especially as INTC's GMs should compress in 1H15 reflecting start-up costs and mix, deleveraging the model. Consequently, momentum in share price in after hours trading could subside.
- FBR Capital is raising their tgt to $30 from $27; they note rev results were in-line but margins better than expected gross margins, likely to provide an EPS lift to Street's 2014-2015 EPS ests. while headwinds in PC have been discouraging, we believe that Moore's law is considerably more durable than any one form factor and presents as good a business plan as any in the technology industry. They are increasingly confident that Intel can opportunistically extract value from the extra transistors afforded to it through the best silicon manufacturing operations in the world.
- Oppenheimer notes better than seasonal performance in DCG was offset by a sharp decline in MCG (-52% Q/Q, 61% Y/Y) during the quarter. GM was guided up ~300bps Q/Q to 63% thanks to lower 14nm start-up costs and higher volumes. With shares up 14% since February lows, they expect share price reaction to be relatively muted on Wednesday morning. Net, they opt to remain on the sidelines until a clearer picture of INTC's wireless traction/profitability and longer-term growth outlook emerges.
- Cowen raises their tgt to $24 from $23.50. While the stock earned some of its recent P/E expansion w/June EPS guide above Street, the underlying PC and DCG narratives remain unch'd. Given an estimated ~$2.30-2.35 in "core" (PCG + DCG net of overhead) EPS, they are still a bit skeptical about magnitude/timing of reducing the hemorrhaging in mobile.
- Stifel notes Intel reported in-line 1Q14 revenues and upside to gross margins for lower than expected factory startup costs. This tailwind to gross margin is expected to continue into the 2Q14 as gross margins were guided to 63%, a 330 bps q/q increase. With what appears to be a stabilizing PC market, growing server market and progress in tablet markets, 2014 may mark Intel's move back to y/y top line and bottom line growth. They believe mgmt left room for both CapEx and OpEx cuts if needed.
- As mentioned earlier, B. Riley downgraded the stock to Neutral