INTC stock has been the best performer on the S&P 500 so far this year.
It’s become a market darling after the US government took a 10% stake in the company and ramped up subsidies. The China-style stake backing is suddenly a trading theme but it couldn’t survive Thursday’s earnings report.
Shares fell 14% after Intel reported mixed results for the fourth quarter, in addition to issuing softer guidance than expected for Q1. The company earned 15 cents per share on an adjusted basis, topping analysts’ consensus estimate of 8 cents per share, per LSEG data. However, revenue fell short of their expectations at $13.7 billion versus the Street’s estimate of $13.4 billion. The firm also said it doesn’t have the supply it needs for seasonal demand in the first quarter, leading to a harsh round of profit taking.
Shares opened at $46.70 after falling as low as $46.51 in the pre-market. That harsh drop only puts INTC stock market to where it was on January 13, in a sign of how much it’s run this year.
The company has been chosen by the US government to be the national fab for chips as leaders try to reduce reliance on equipment made in Taiwan. That said, for a decade Intel has struggled to execute and CEO Lip-Bu Tan gave a lackluster forecast that warned about manufacturing problems.
Analysts at JPMorgan bumped their target to $30 from $35 but that’s still significantly below spot.
“Results were stronger than expected, but guidance landed well short of expectations — both primarily a function of burgeoning server CPU demand, offset to varying degrees by Intel’s inability to fully service this demand due to a lack of available internal wafer capacity,” said the analysts at JPM.
Other pre-market moves:
- Capital One shares slipped about 2% after the bank announced a $5.15 billion deal to acquire fintech firm Brex, a move it said would strengthen its presence in business payments.
- Spotify shares rose roughly 2% after a Goldman Sachs analyst upgraded the stock to buy from neutral.
- Novo Nordisk shares gained around 2% following strong weekly prescription data for its new oral weight-loss drug.
This article was written by Adam Button at investinglive.com.