Bernstein Affirms Market Perform on Intel, $25 Price Target

Bernstein SocGen Group analyst Stacy Rasgon reiterated a Market Perform rating and $25 price target on Intel (NASDAQ: INTC).

“Intel’s Foundry business is in the process of a significant transformation as they work towards its technology/operational and financial targets (which were re-affirmed), while attempting to shift to a more customer-oriented culture, and at the same time navigating all the current noise around a potential split, TSMC involvement, and the recent CEO departure.

There was a frank discussion of the challenges that would be associated with running TSMC processes on Intel’s footprint (it sounded like a non-starter to us), though Kevin did acknowledge their competitor has a customer-service mindset that Intel has never developed, but needs to in order to succeed in foundry.

Kevin sees key strengths in IFS’ technology roadmap (18A as well as advanced packaging), and believes IFS offerings can be differentiated vs. TSMC.

18A progress was indicated as on track with Panther Lake coming in the 2H; he suggested much of the current noise around poor yields etc was “FUD.” Kevin believes success will depend on execution in delivering on its technology promises, and building customer trust and a strong customer service muscle though they clearly have a long way to go (break-even targets remain at “end of 2027” and meaningful revenue, if it happens, still looks like an end-of-the-decade phenomenon).

While we found Kevin to be optimistic about Intel’s manufacturing and foundry prospects, he was also realistic and candid about the challenges that lie ahead of them and what needs to be accomplished, and gave a frank acknowledgement of the company’s current weaknesses as well as their strengths (which was a refreshing change from the blind optimism that has pervaded Intel’s communications in the past).

We came away with a view that, while there remains substantial wood to chop here, new leadership seems at least more cognizant of the hurdles in front of them, and decisions, as well as commitments, seem to be more grounded in reality than before which potentially gives us a clearer lens to evaluate the situation as we watch how things evolve from here.”

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