Why Deutsche Bank Is Bullish On Intel

In a recent report, analysts at Deutsche Bank reiterated their Buy rating on Intel Corp (NASDAQ: INTC) and raised their price target for the stock from $40.00 to $42.00.

Analysts are impressed by Intel’s recent earnings numbers and execution during the fourth quarter of 2014.

The Numbers

While a 6 percent quarter-over-quarter (q/q) growth in revenue was in-line with consensus expectations, Intel’s earnings per share of $0.74 beat estimates of $0.66 for the quarter. The report highlights Intel’s Data Center Group (DCG) earnings growth of 11 percent q/q, on 5 percent unit growth, along with a 7 percent increase in average sales prices.

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The DCG growth helped offset a 4 percent q/q decline in PC Client Group (PCG) revenue.

Intel’s gross margin of 65.4 percent was slightly higher than the mid-guidance number of 64 percent due to higher platform prices.

Intel also disclosed $4 billion in Q4 share buybacks.

Guidance

Intel’s guidance includes $13.2 billion to 14.2 billion in revenue for the first quarter of 2015, on gross margins of around 60 percent. For the year, Intel reiterated its projection of mid-single digit revenue growth on 62 percent gross margins.

Analysts’ Take

Deutsche Bank analysts believe Intel will continue its strong performance in 2015.

“We remain confident in our thesis that INTC can continue to gain share in a stabilized PC market, see growth in DCG, shrink losses in Mobile, and return meaningful cash to shareholders," they wrote.

Deutsche Bank lowered its 1Q15 earnings per share projections for Intel from $0.52 to $0.48, but their target for the full year remains $2.40, on 62 percent gross margins.

They also project 4 percent revenue growth for the year and $6 billion in share buybacks.

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