How to Get Intel up to $36, or Even $40: Analysts, Opportunity and Risk

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Intel Corp. (NASDAQ: INTC) had an incredible Friday after the company raised its guidance. While the increase in business PC demand was at least somewhat tied to Microsoft ditching support for Windows XP, you have to consider that the market has not heard a single positive trend for the PC market in years. Intel hit $30, a feat that many believed was becoming impossible.

24/7 Wall St. has several considerations here. First is that there was some signs of PC stabilization as early as January. The real issue is that last September we outlined the path for Intel to hit $28 or even $30. Intel was at $23.74 at that time, and the consensus price target from analysts was only $23.80. That consensus is now closer to $30, but there were almost an endless number of analyst upgrades in rating and price targets on Friday.

We have hit several things here in our outlook and suppositions. There is the opportunity in growth markets, followed by the charts and technical, the short interest factor, analyst calls and how the market plays in here.

What we want to stress is that Intel hit $30 without making key progress in the smartphone and tablet markets. This has yet to be fought by Intel. It is certainly possible that Intel will just miss out on the smartphone and tablet war entirely. Still, if Intel does manage to score a victory there, and if the Internet of Things growth is maintained, then Intel could still be headed potentially much higher.

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Another boost is from Intel’s chart. Breaking above $30 was not just a 52-week high. This was a high not seen in a decade. The chart below will show how Intel hit this mark. We would remind readers that Intel’s rise in the past has come close to this before, so there could be a lot of near-term resistance as profit-taking could be an expected theme. Any time that every single investor who bought shares over the past 10 years is profitable, profit taking just seems more than likely.

Short sellers must have smartened up here that Intel was headed higher. This last week we saw that the May 30 settlement short interest date was the fifth consecutive decline in the short interest report. The following trends were seen in the Intel short interest this week (by settlement date and shares short):

  • 5/30/2014 170,211,540
  • 5/15/2014 177,732,864
  • 4/30/2014 182,576,669
  • 4/15/2014 202,974,802
  • 3/31/2014 221,756,069
  • 3/14/2014 222,525,143
  • 2/28/2014 212,633,979
  • 2/14/2014 208,989,806
  • 1/31/2014 206,483,994