What’s Subsequent for Intel Inventory After a Punishing Yr? Some Say to ‘Keep Far Away’

Buyers in Intel’s (INTC) inventory have not had a lot to have a good time in 2024, with the shares shedding greater than half their worth. Subsequent 12 months may very well be difficult too.

Analysts have recommended that the appointment of a brand new CEO and modifications to Intel’s turnaround plans may very well be near-term catalysts for the inventory. However additionally they say that the enterprise challenges going through the storied chipmaker might take months—or years—to work by way of.

“The state of affairs right here appears prone to hold getting worse earlier than it will get higher,” Bernstein analysts wrote after the departure of former CEO Pat Gelsinger earlier this month.

As Intel searches for a brand new CEO, the corporate’s path ahead is prone to evolve. Gelsinger had been a proponent of maintaining Intel’s personal manufacturing and contract foundry companies as a part of his turnaround effort. Now analysts recommend a breakup of its operations may very well be extra seemingly. (Rumors to that impact often energized Intel’s shares earlier this 12 months.)

In a presentation to traders final week, interim co-CEOs Dave Zinsner and Michelle Johnston Holthaus known as the potential for a full separation of Intel’s foundry enterprise an “open query for an additional day,” in line with a transcript supplied by AlphaSense. 

Shares of Intel completed Friday at $19.52, leaving them down 61% for the 12 months. The PHLX Semiconductor Index (SOX) is up about 19% in 2024; Nvidia (NVDA), which earlier this 12 months changed Intel within the Dow, has greater than doubled in worth.

Wall Road is broadly cautious about Intel’s inventory, with 13 of the 16 analysts tracked by Seen Alpha sitting on “maintain” scores and three with “sells.” Nonetheless, there’s a point of optimism on the market: Their consensus value goal, at the moment round $24, represents a roughly 23% premium to latest costs.

Financial institution of America analysts wrote earlier this month {that a} breakup might now turn into extra seemingly.  The analysts, nevertheless, additionally mentioned a lot of Intel’s turnaround might nonetheless depend upon the foundry enterprise, set to obtain billions of {dollars} in CHIPS Act funds tied to assembly manufacturing milestones. 

Whereas a breakup may benefit shareholders within the brief time period, Wedbush analysts wrote not too long ago, it will fail to resolve Intel’s bigger points in proving its competitiveness, citing the corporate’s “lagging place” in each chip design and manufacturing. 

And Bernstein analysts earlier this week suggested traders to “keep distant.”