Intel (NASDAQ: INTC) shares have weakened from $68.49 to $57.90 since 12th April, and the current price stands around $58.80. Intel reported solid first-quarter results last week, but the Bank of America retained a bearish view on Intel.
Fundamental analysis: Bank of America retained a bearish view on Intel
Intel reported Q1 results last week; total revenue has decreased only -0.7% Y/Y to $19.7B while the EPS was $1.39, which was $0.25 above estimates. Total revenue has decreased below expectations (beats by $1.75B), and the company raised its full-year 2021 guidance.
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Client Computing topped estimate with sales up 8% to $10.61B, but it is essential to mention that Data Center sales were down 20% to $5.56B. Intel raised its profit expectation to $4.60 per share for the 2021 fiscal year, while the full-year revenue should be around $72.5B.
“Intel delivered strong first-quarter results driven by exceptional demand for our leadership products and outstanding execution by our team. The response to our new IDM 2.0 strategy has been extraordinary, our product roadmap is gaining momentum, and we’re rapidly progressing our plans with a re-invigorated focus on innovation and execution,” said CEO Pat Gelsinger.
Despite this, the Bank of America retained a bearish view on Intel as there is no sales growth in a year when sales of PC units are growing 14% to 15%. Bank of America raised its industry sales forecast for 2021 to $508.8B but remains cautious on Intel shares.
My opinion is that this company is reasonably valued, Intel trades at less than 7 X 2020 EBITDA, gross margin for Q1 was 58.4%, and the board of directors said that they remain committed to growing the dividend. Intel increased its revenue in 2020 to $77.86B from $71.96B in 2019, and another useful piece of information for potential investors is that this company has paid more than $16B in dividends to its shareholders in the last three years.
Technically looking, Intel shares remain under pressure, and if the U.S. stock market enters a more significant correction phase, the share price could be at much lower levels.
Technical analysis: Intel shares continue to trade below $60 resistance
Intel shares continue to trade below $60 resistance after the company reported first-quarter results.
The important support levels are $55 and $50; $60 and $65 represent the current resistance levels. If the price jumps above $60, it would be a signal to trade Intel shares, and the next target could be around $62.5, but if the price falls below the $50 support level, it would be a strong “sell” signal.
Summary
Intel reported solid first-quarter results last week, but the Bank of America retained a bearish view on Intel as there is no sales growth in a year when sales of PC units are growing 14% to 15%. Technically looking, Intel shares remain under pressure, and if the price falls below the $50 support level, it would be a strong “sell” signal.
