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Intel Corporation Just Beat EPS By 7.8%: Here's What Analysts Think Will Happen Next

It's been a pretty great week for Intel Corporation (NASDAQ:INTC) shareholders, with its shares surging 15% to US$68.47 in the week since its latest full-year results. The result was positive overall - although revenues of US$72b were in line with what analysts predicted, Intel surprised by delivering a statutory profit of US$4.71 per share, modestly greater than expected. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.

View our latest analysis for Intel

NasdaqGS:INTC Past and Future Earnings, January 26th 2020
NasdaqGS:INTC Past and Future Earnings, January 26th 2020

Taking into account the latest results, the latest consensus from Intel's 37 analysts is for revenues of US$73.7b in 2020, which would reflect a reasonable 2.5% improvement in sales compared to the last 12 months. Statutory per-share earnings are expected to be US$4.74, roughly flat on the last 12 months. Before this earnings report, analysts had been forecasting revenues of US$72.2b and earnings per share (EPS) of US$4.46 in 2020. It looks like there's been a modest increase in sentiment following the latest results, with analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

With these upgrades, we're not surprised to see that analysts have lifted their price target 15% to US$66.59 per share. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Intel analyst has a price target of US$90.00 per share, while the most pessimistic values it at US$45.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Intel's past performance and to peers in the same market. It's pretty clear that analysts expect Intel's revenue growth will slow down substantially, with revenues next year expected to grow 2.5%, compared to a historical growth rate of 6.2% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 8.2% per year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect Intel to grow slower than the wider market.

The Bottom Line

The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Intel's earnings potential next year. Fortunately, analysts also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Intel analysts - going out to 2022, and you can see them free on our platform here.

You can also view our analysis of Intel's balance sheet, and whether we think Intel is carrying too much debt, for free on our platform here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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