By: Brendan Gilmartin
Intel (INTC) is slated to report 3Q 2013 earnings after the closing bell on Tuesday, October 15. Results are typically available between 4:05 p.m. and 4:15 p.m. EST with a conference call to follow at 5:30. Other tech names are often impacted by the results, along with related ETFs such as the PowerShares (QQQ) & Market Vectors Semiconductor ETF (SMH).
Outliers & Strategy
- Earnings Per Share: Intel is seen posting EPS of $0.53, at the mid-point of analyst forecasts ($0.46 to $0.61) for the third quarter. (Source: Yahoo! Finance). (In previous quarters, Intel offered Non-GAAP EPS as the comparable value).
- Revenues: Intel reported back in July it was looking for revenues in the range of $13.0 bln and $14.0 bln (midpoint is $13.5 bln). The current consensus is at $13.47 bln.
- Gross Margins: Intel stated back in April the expectation for fourth quarter gross margin is 61%, plus or minus a couple percentage points (59% - 63%).
Keep an eye on the following guidance measures for the 3Q 2013 period:
- Revenues Guidance (Est. $14.02 bln). If the midpoint of the range published by Selerity is >$13.8 bln, it would be seen as a bullish forecast for the chipmaker, and vice versa.
- Gross Margins Guidance. GMs have been running in the high 50s to low 60s.
- 10/11: Macquarie Research cut Intel from Outperform to Neutral with a price target of $22, according to a report on Barron's Online, citing the potential impact of cloud-computing on the PC sector, as it cuts into demand for stronger microprocessors.
- 09/25: Intel declared a quarterly dividend of $0.225 per share ($0.90 on an annual basis). The yield is 3.87%.
- 09/13: Jefferies upgraded Intel from Hold to Buy and raised the price target from $27.00 to $30.00, according to a report on StreetInsider.com. The firm cited product enhancements, particularly in tablets and smartphones.
Intel shares have underperformed the broader market gauges in 2013 and currently trade at a key long-term level near $23.25. Should earnings surprise to the upside, look for the next level of resistance near $23.75, followed by $24.25. If results disappoint, $22.50 is the first level of support (old resistance), followed by the August lows near $22.00. (Chart courtesy of StockCharts.com)
Intel shares are range-bound ahead of the 2Q 2013 earnings release, as concerns over slower PC sales and slow adoption of the Windows 8 platform are offset by a solid dividend payout, low valuation, and more diversified product offerings that cater to the growth in mobile. Given the disappointing price action through the first half of the year, look to the firm's revenues guidance for the next quarter for a reliable trading signal. Anything above estimates should be enough for a decent move higher.
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