UPDATE: Pacific Crest Upgrades Intel on Strong Forecasts of PC, Grantley Server & Foundry Business

In a report published Monday, Pacific Crest Securities analyst Michael McConnell upgraded Intel (NASDAQ: INTC) from Sector Perform to Outperform and established a $31.00 price target.

McConnell reported that supply chain conversations suggest an acceleration in corporate demand of PC OEM orders in the first quarter. Forecasts indicate that this demand will continue into the second quarter.

The analyst added that the upcoming Grantley server platform is “positioned to reaccelerate spending at traditional IT customers and serve as a likely driver for Intel's high-margin DCG business next year.” Grantley will offer improvements including DDR4 memory support, four lanes of 10 gigabit Ethernet support, improved energy efficiency, and greater floating point capability.

Pacific Crest noted future success in Intel's nascent foundry business will assist the company to “lengthen its manufacturing lead, consolidate the industry's leading-edge manufacturing base, and drive a higher multiple for its stock.” McConnell commented that Intel has three main foundry challenges including direct competition with potential ARM-based customers, the lack of evidence showing long-term commitment to foundry service, and the lack of tools and support to customers compared to TSMC. The analyst expects the company to overcome these disadvantages over time.

Shares of Intel closed at $26.16 on Friday and are currently up 2.06 percent at $26.70.