What’s Subsequent for Intel Inventory After a Punishing 12 months? Some Say to ‘Keep Far Away’

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

Analysts have instructed that the appointment of a brand new CEO and adjustments to Intel’s turnaround plans might be near-term catalysts for the inventory. However in addition they say that the enterprise challenges dealing with the storied chipmaker might take months—or years—to work by way of.

“The scenario right here appears prone to maintain getting worse earlier than it will get higher,” Bernstein analysts wrote after the departure of former CEO Pat Gelsinger in early December.

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

In a presentation to buyers earlier this month, interim co-CEOs Dave Zinsner and Michelle Johnston Holthaus referred to as the opportunity of a full separation of Intel’s foundry enterprise an “open query for one more day,” in response to a transcript supplied by AlphaSense. 

Shares of Intel completed Monday at $20.20, leaving them down 60% for the 12 months. The PHLX Semiconductor Index (SOX) is up about 22% in 2024; Nvidia (NVDA), which earlier this 12 months changed Intel within the Dow, has greater than doubled in worth.

Wall Avenue is broadly cautious about Intel’s inventory, with 13 of the 16 analysts tracked by Seen Alpha sitting on “maintain” rankings and three with “sells.” Nonetheless, there may be a point of optimism on the market: Their consensus worth goal, at present round $24, represents a roughly 19% premium to current costs.

Financial institution of America analysts wrote earlier this month {that a} breakup might now change into extra seemingly.  The analysts, nonetheless, additionally stated 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 lately, it could 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 final week suggested buyers to “keep far-off.”

CORRECTION & UPDATE—Dec. 23, 2024: This text has been up to date to replicate more moderen share worth data and that Intel co-CEOs Dave Zinsner and Michelle Johnston Holthaus gave their presentation to buyers earlier this month.