Deutsche Bank has resumed coverage of Intel Corp (NASDAQ:INTC, ETR:INL) with a "Hold" rating and a $23 price target on Wednesday, citing confidence in new CEO Lip-Bu Tan’s leadership but warning that the company faces a prolonged and difficult turnaround.
Analysts said the chipmaker’s path to re-accelerated growth under Tan will require “patience,” as execution challenges and ongoing macroeconomic and company-specific headwinds continue to weigh on performance.
“While INTC has announced several welcome and necessary cost-cutting actions to mitigate these impacts, the path to meaningful EPS and free cash flow generation remains cloudy and highly dependent on a turnaround in the company’s Foundry business,” analysts wrote in a note.
Intel has cut operating expenses and headcount, and trimmed its capital spending outlook, in a bid to stabilize its financial footing. However, elevated manufacturing costs and a lack of competitive products in key markets are expected to keep pressure on revenue and profitability in the near to medium term.
Deutsche Bank’s price target of $23 implies limited upside from Intel’s current trading price of $20.91.