Investors should be aware when a group of financial analysts – often obsessed with mysteries such as a hundred percent change in gross margins – makes changes to their stock estimates after a leadership shift.
That’s what happened Thursday after Intel said CEO Bob Swan would be succeeded by VMware CEO Pat Gelsinger.
Alumni on February 15, analysts love the switch
Intel shares (symbol: INTC) closed up 4 percent at $ 59.25 after receiving a 7 percent advance on Wednesday.
BMO Capital Markets analyst Ambrish Srivastava raised his target for the share price to $ 70 from $ 50 as early as Thursday. His reasoning relates to Gelsinger’s experience at Intel, where he has worked for 30 years, and at VMware, where he has been operating since 2012.
“While we don’t expect any big changes in the near term. But the vast amount of experience Pat Gelsinger has taken from his previous tenure at Intel, including his experience with VMware, we believe he is the right person who can tackle horrific problems. The insurmountable challenge that Intel faces, ”Srivastava wrote.
The analyst added that given the number of disappointments Intel has found, even a few steps in the right direction should drive stocks higher. He also pointed out the success of its rival Intel.
Advanced micro devices (AMD),
Under the leadership of Lisa Su who Barron’s It was identified as one of the best CEOs in the world.
Atlantic Equities also raised its price target for Intel shares, raising it to $ 55 from $ 36. Atlantic analyst Ianjit Bhatti upgraded the stock to be equivalent to its holdings, arguing that the company expected to follow its own guidance in Fourth quarter, he said that Gelsginer was a proven CEO during his time at VMware.He reportedly tattooed the company name on his arm when he took the job and had a deep understanding of. Intel and the chip business
“We upgraded to be neutral due to the capabilities of the new Intel CEO, the possibility of more drastic strategic changes, and our expectation that the market would be willing to look through the negative news in the industry. Close-up while new strategies are being defined and implemented, “wrote.
Morgan Stanley raised its price target to $ 70 from $ 60 and upgraded the stock to be equivalent to buy. Analyst Joseph Moore warned investors in a note Thursday that there was no simple fix for the company’s struggles, but said that with the help of a new leader, the risks could be mitigated over time.
Eric Ross, chief investment strategist at Cascend Securities, did not quickly join the cheering. In a note on Thursday, he wrote, “Intel shares should not be based on Bob Swan’s departure. This is just an acknowledgment of the issue.”
Ross said Swan was only part of the company’s weaknesses and that the underlying problem was an engineering challenge. These could take more than three years to resolve, and despite the optimism, he said, as Intel struggled.
Taiwan semiconductor manufacturing
(TSM) takes a leap forward in technology, invention, Intel’s setback may never recover, he said.
Intel shares returned about 2% over the past year as the PHLX Semiconductor index was above 50%.
Write to Max A. Cherney at firstname.lastname@example.org.