On Tuesday, Evercore ISI maintained an In Line rating for Intel Corporation (NASDAQ:INTC), with a steady price target of $26.00, following the announcement of CEO Pat Gelsinger's retirement. The firm recognized the advancements made during Gelsinger's tenure in reducing the technology gap with competitors like TSMC.
According to InvestingPro data, Intel, currently valued at $103 billion, has faced significant challenges with negative returns on equity of -16% over the last twelve months. This performance aligns with the board's desire for a new CEO to prioritize product focus.
Intel has appointed David Zinsner, CFO, and Michelle Johnston Holthaus, EVP and General Manager of CCG, as interim Co-CEOs during the search for a permanent leader. Holthaus has also been named CEO of Intel Products. The board, led by Frank Yeary, has emphasized the importance of centering the company's efforts around the product group.
With revenue of $54.25 billion in the last twelve months and a FAIR overall financial health score according to InvestingPro, the company faces crucial decisions ahead. Subscribers can access 7 additional key ProTips and comprehensive analysis in the Pro Research Report.
Despite these leadership changes, Evercore ISI sees several ongoing challenges for Intel. The company is not only facing competition from AMD (NASDAQ:AMD) and NVDA but also from its customers who are developing custom CPU and AI processors. The datacenter market is shifting from x86 architecture to GPUs and ARM at the edge, which adds to Intel's difficulties.
The analyst's report includes data showing Intel's continued loss of market share in servers and desktops, although there has been some stabilization in the notebook segment. The server CPU market remains at approximately 6 million units per quarter, unchanged since 2017, while desktop units are on the decline. Notebook CPUs have held steady at around 52 million units per quarter for the past fifteen years, excluding spikes during certain refresh cycles and the COVID period.
Evercore ISI has chosen to remain on the sidelines, awaiting clearer signs of a potential turnaround at Intel.
In other recent news, Intel Corporation is undergoing significant leadership changes following the retirement of CEO Pat Gelsinger. The company has appointed David Zinsner and Michelle Johnston Holthaus as interim co-CEOs. Alongside these changes, recent financial reports indicate a third-quarter revenue of $13.3 billion, a 4% sequential increase, and full-year guidance for Mobileye with $485 million in revenue.
Additionally, Intel's programmable chips division, Altera, reported a 14% sequential increase in revenue, reaching $412 million for the quarter ending in September. BofA Securities and Stifel have maintained their underperform and hold ratings on Intel, respectively, while Bernstein reiterated a market perform rating. Amid these developments, Intel continues to face significant challenges, including competitive pressures and strategic adjustments.
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