Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money

66% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

  • Earnings

Will Intel’s share price exceed investors’ expectations following Q2 results?

Will Intel’s share price exceed investors’ expectations following Q2 results?

In the run up to its Q2 earnings announcement, Intel’s [INTC] share price through 21 July’s close sat at $60.70, around the middle of its 52-week range.

Relative buoyancy comes despite some significant challenges for Intel’s share price in recent weeks. On 9 July, the company lost its status as the largest US chipmaker by market cap for the first time, after competitor Nvidia [NVDA] briefly took its crown.

The company has struggled in the wake of the market crash in March and, although Intel’s share price is currently 36.8% above the low of $44.36 it suffered in March, it is still 10.4% off its all-time high close of $67.75 achieved in January.

Will its upcoming earnings report, due 23 July, help to push intel’s share price even higher?



What's expected from Intel’s share price in Q2?

Intel’s share price performance has been adversely affected by recent management changes and concerns about its fluctuating strategy.

Many observers believe Intel’s investment in data centres and 5G technology could be lucrative as mobile networks upgrade to the new wireless standard. However, the company’s recent (albeit short-lived) suspension of shipments to Chinese server maker Inspur [600756] was a warning that success in the former market may not be easy to achieve.

On the upside, Zacks believes that a combination of high-performance processors and solid demand from cloud service providers could drive near-term growth for Intel. The United States Congress is also considering two major semiconductor stimulus bills. If passed, they could result in tens of billions of dollars in subsidies and investments for the sector.

Earlier this year, Intel withdrew its 2020 guidance, citing business uncertainty prompted by the coronavirus crisis. In the month to 8 July, Intel’s share price fell by 7.5%, underperforming the computer and technology sector as well as the wider market. In the same period, the sector gained 4.97%, and the S&P 500 lost just 1.3%.

For the last reported quarter, however, Zacks noted earnings of $1.45 per share — a figure comfortably ahead of the consensus estimate of $1.28. The previous quarter told a similar story: the company was expected to post earnings of $1.24 per share but actually produced earnings of $1.52 per share.

Intel is expected to report earnings of $1.10 per share when it publishes its Q2 2020 results. The Zacks consensus estimate for revenue is projecting net sales of $18.54bn, up 12.4% from the same period last year — and, for the full year, it expects earnings of $4.82 per share on revenues of $74.01bn, which would represent a fall of 1.03% and an increase of 2.84% respectively from 2019.


Intel's estimated revenue


Analysts say to hold on

Of the 40 analysts polled by CNN Money, the consensus rating on Intel is to hold. This rating is offered by 19 analysts, while 14 rate it a buy, five a sell and just one apiece rate it outperform and underperform.

On 14 July, Zacks noted that Intel’s forward P/E ratio of 12.18 represents a discount compared to the wider industry's average forward P/E of 35.94. The company’s PEG ratio (1.62) is also lower than the semiconductor general industry average of 3.24.

In mid-June, Morgan Stanley raised its 12-month target for Intel’s share price to $65 but, a few weeks later, Goldman Sachs reduced its price target from $65 to $54. Goldman analyst Toshiya Hard said this was based on a number of factors, including weakening PC demand and enterprise spending, a fall in market share, reduced gains in operating expense efficiency and a fall in memory pricing.

Most other analysts have pitched the stock somewhere in Goldman’s recent range, with Barclays setting its target at $58 and Northland Capital at $60.

On 21 July, 33 analysts polled by CNN Money provided a median 12-month price target of $62, representing a 1.4% increase on Intel’s share price through 21 July’s close.


Market Cap $259.925bn
PE ratio (TTM) 11.90
EPS (TTM) 5.16
Quarterly Revenue Growth (YoY) 23.5%

Intel share price vitals, Yahoo Finance, 22 July 2020

Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

Continue reading for FREE

  • Includes free newsletter updates, unsubscribe anytime. Privacy policy

Free ebook

Tricks of the trade: 7 interviews with the world’s top traders

Get it now

Related articles