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Intel (INTC) shares are down nearly 10% at the time of writing on July 25 after the semiconductor firm reported weaker-than-expected profit for its fiscal Q2.
Investors are bailing on INTC this morning because its earnings outlook for the current financial quarter came in shy of Street estimates as well.
Including today’s plunge, Intel stock is down roughly 25% versus its year-to-date high in February.
Is Intel Stock Worth Buying After Q2 Earnings?
Speaking with CNBC on Friday, Bernstein’s senior analyst Stacy Rasgon argued Intel’s Q2 release was far from “all bad.”
The chip company managed to beat revenue expectations in its second quarter and issued top-line guidance that’s also “decent for now” – according to the semiconductor industry expert.
However, INTC shares remain a “wait-and-see” story until the management accelerates production and record customer traction for the next-gen processes (18A and 14A), he added on “Closing Bell: Overtime.”
Bernstein maintained its “Hold” rating on Intel stock after the company’s second-quarter earnings report. Its $21 price target barely suggests any upside from current levels.
It May Still Be Reasonable to Own INTC Shares
Despite continued weakness in the recently concluded quarter and Rasgon’s cautious stance, Intel shares are not entirely void of reasons to invest.
For starters, INTC stock is currently going for a price-sales (P/S) multiple of 1.93x only, notably below the average for the broader semiconductor industry.
Plus, Intel’s current chief executive Lip-Bu Tan pulled the plug on the company’s planned fab projects in both Poland and Germany on Friday.
Additionally, he slammed the breaks on INTC’s commitment to building an advanced facility in Ohio, adding that winning new customers and the demand outlook at large will determine the pace of reacceleration in construction.
Under his leadership, the company is committed to lowering the global headcount by 15%, streamlining management layers by as much as 50%, and ending this year with 75,000 employees – all of which could translate to a higher stock price for Intel over time.
Wall Street Sees Material Upside in Intel
Other Wall Street firms aren’t particularly constructive on Intel stock either.
The consensus rating on INTC shares currently sits at “Hold” only, but the mean target of about $22.86, nonetheless, indicates potential upside of some 11% from here.
