Intel Corporation (NASDAQ:INTC)’s earnings per share (EPS) in 2024 will likely be hurt by gross margin headwinds, according to BofA Securities analysts.
In an update to clients, they reiterated their ‘Underperform’ rating on the stock, while lowering their price objective to $32 per share from $35, citing factors such as the faster pace of new products that could keep costs elevated as well as a competitive threat from Advanced RISC Machines (ARM) in servers and personal computers that are likely to materialize in calendar year 2025.
"For Intel to get to the $2-$3 EPS that bulls argue for, sales would need to grow 19-32% off calendar year 2023 estimated levels," the analysts wrote.
They added that its gross margin headwinds would come from high manufacturing costs and likely low yields on advanced processes.
Analysts at BofA also believe Intel’s operating expenditures should start rising year over year in the calendar year 2024 following a "healthy round" of cuts from 10 divestitures and various cost cutting measures.
Shares of Intel climbed 9% to $35.54 in midday trading on Friday and have gained 33% year to date.
Contact Sean at sean@proactiveinvestors.com