According to the news, Intel’s new CEO declared on Tuesday that the old Intel was ‘returning’ and that it would build two chip factories in Arizona. But some Wall Street analysts do not seem to be optimistic about this plan.
At a time when the global chip shortage is becoming more and more serious, Intel will use these new factories to produce chips for other companies. Investors initially reacted positively to this unexpected move by the new CEO, Pat Gelsinger, and Intel shares rose 3.7% to $65.82 before the market on Wednesday.
However, analysts’ reactions to this are mixed, with large institutions like Citigroup and Goldman Sachs expressing their downside. Citi analysts said in a research report that Intel is not ready to take this step. The company gave Intel stock a “neutral” rating with a target price of $65.
Citigroup wrote in the research report: ” We think this business has almost no possibility of success because Intel requires multiple chip veterans to run the business, but also to change the company’s business practices, and Intel did not do so.”
Goldman Sachs reiterated the “sell” rating of Intel’s stock, pointing out that its plans to spend $20 billion to build a new factory and other early investments will reduce its free cash flow and will have conflicts of interest with competitors.
Even if IFS eventually becomes an independent business independent of Intel’s core business, we believe that many non-factory customers that compete with Intel are not willing to cooperate with IFS .” Goldman Sachs wrote in a research report.
Other analysts are more optimistic. Investment bank Baird believes that Intel’s move is a fresh attempt and reiterated the stock’s “outperform” rating. “We are currently witnessing the worst capacity shortage since the late 1990s.
Baird wrote, “Intel faces the most friendly environment for the US semiconductor manufacturing industry in the past few decades.” The company’s target value for Intel is $85.
There is still a 33% upside from the closing price on Tuesday. Intel has been unable to find a direction for development in recent years. While the market has repeatedly set new highs, it has fluctuated between US$45 and US$65.
(Via)
