Intel Corporation (NASDAQ: INTC) reports earnings after the close of trading today and is the first of the tech giants to report. Consensus estimates from Thomson Reuters have actually come up a bit in recent days on rounding higher. We now show that consensus estimates are $0.28 EPS and $9.04 billion in revenues (up from $0.27 and $9.02 billion last week). Intel does generally offer guidance and next quarter estimates are $0.34 EPS on $9.51 billion in revenues. What we want to look at are what the charts, analysts, and stock options are factoring in.
- While we will be looking for direct comparisons in Microsoft, Advanced Micro Devices Inc. (NYSE: AMD) is the most directly tied to the company because of processors. And in ETF-Land, Intel’s weighting in the Semiconductor HOLDRs (NYSE: SMH) is approximately 23% and it is 29.1% of the weighting of the Ultra Semiconductor ProShares (NYSE: USD).
Be advised, Intel’s guidance was raised just over a month ago based on “stronger than expected demand for microprocessors and chipsets.” Intel put guidance at $9.0 billion in revenues, plus or minus $200 million, That was above its prior guidance of $8.5 billion, plus or minus $400 million. Intel also put gross margin percentage “in the upper half of the previous range of 53 percent, plus or minus two percentage points.” To show just how much higher estimates are, that earnings outlook from analysts is 40% higher than it was just about two and a half months ago.
Some analysts are still cautious, but the big calls in recent weeks were mostly positive. Analysts have an average price target between $22.00 and $23.00, which is not exactly a huge bullish stance considering the $20.65 price today after a 1.2% gain.
Intel recently bounced after briefly trading under its 50-day moving average. That figure is currently listed as $19.38, so we’d look to that for an implied absolute support area if the company suddenly somehow manages to disappoint with guidance. The area where Intel is trading today and yesterday was also a toppy area back in September.
Options traders appear to be braced for a move of what looks to be only about $0.60 to $0.70 in either direction. With options expiring on Friday, there is a very low time value premium left in these options.
As we noted over the weekend, since the end of June Intel is up 22.5% and since the March 9 close (widely recognized as the absolute market bottom day) this is up over 60%. That being said, Intel may have beat targets and raise estimates to keep everyone happy or at least to keep investors from wanting to lock in some profits.
JON C. OGG
OCTOBER 13, 2009