Seeking Alpha

Intel bear Rasgon throws in the towel

  • Bernstein's Stacy Rasgon, bearish on Intel (INTC) since Oct. 2012 (and often vocally so), has upgraded shares to Market Perform, and lifted his PT by $6 to $28.
  • In spite of the upgrade, Rasgon insists his "structural short thesis" for Intel, which centers around ASP/margin pressure caused by a mix shift towards mobile processors (i.e. Atom), has "played out." But he argues the market doesn't seem to mind. "We never got the de-rating that we sought; quite the opposite in fact, as multiples have climbed rather than compressed."
  • He adds near-term PC strength - Intel is only 2 weeks removed from a guidance hike - is "a definite headwind" for the bear thesis, and sees several potential bullish catalysts. They include a broader PC recovery (for now, it's enterprise-focused), gross margin improvement stemming from the 14nm transition, positive mobile newsflow, and a fresh data center upgrade cycle following the 2H launch of Intel's Grantley Xeon CPUs.
  • INTC +0.4% AH to $30.89. The 52-week high is $31.00.
Comments (9)
  • Charles Moscoe
    , contributor
    Comments (1974) | Send Message
     
    When he turns that into a BUY we have seen the top of INTC.
    26 Jun 2014, 06:38 PM Reply Like
  • hksche2000
    , contributor
    Comments (989) | Send Message
     
    He's probably been buying INTC hand over fist while talking it down.
    26 Jun 2014, 08:29 PM Reply Like
  • Chris Lau
    , contributor
    Comments (2354) | Send Message
     
    Here's his track record. Ouch.
    "Ranked #2953 out of 3133 Analysts (Ranked #6230 out of 6644 total experts)"
    http://bit.ly/1yGcSg3

     

    I'm bullish on (AMD) but even more bullish on (INTC). Certainly a top for Intel would be in the low to mid 30's (32 - 35$).
    26 Jun 2014, 10:29 PM Reply Like
  • Esekla
    , contributor
    Comments (3605) | Send Message
     
    Pretty decent analysis, actually. The only problem with it was that it ignored the macro situation. When money isn't tied to anything in the real world, then neither are stock prices and the search for yield becomes the only thing that matters. Stocks then become a beauty contest in much the same way that Keynes said that currencies are:

     

    http://bit.ly/S6F1Eo

     

    My Momentum Mechanism article discusses more of how this plays out in terms of actual market dynamics.
    26 Jun 2014, 06:42 PM Reply Like
  • whiteowl
    , contributor
    Comments (241) | Send Message
     
    The poor sumbitch. It's embarrassing to watch a short have to claw his way back into the light. I almost feel sorry for him. He's reduced to citing "possible near-term catalysts" to justify his clawback, but can't quite bring himself to do a 180 and go full-on buy. Oh, the humanity!

     

    The funniest part was when he acknowledges the potential for another Data Center upgrade cycle with the advent of Grantley, which does make sense, except that it doesn't explain the strength in DCG even before the platform is available.

     

    Some might take the strength in DCG even before Grantley as a sign that data centers just can't wait, they need to deal with the explosion in data NOW.
    26 Jun 2014, 10:07 PM Reply Like
  • whiteowl
    , contributor
    Comments (241) | Send Message
     
    Pacific Crest analyst Michael McConnell, an Intel bull, said 10 weeks ago that "We believe Intel’s upcoming Grantley server platform will reaccelerate spending at traditional IT customers and serve as a likely driver for Intel’s Data Center Group (DCG) business (22% of company sales, ~40% of operating profit) in 2015. As the next “tock” in Intel’s server platform roadmap, Grantley will offer major feature set improvements, including support for DDR4 memory, four lanes of 10 gigabit Ethernet (10gE) support, greater floating point capability, and improved energy efficiency." He doesn't offer any explanation for the current strength in DCG business pre-Grantley, either.
    26 Jun 2014, 10:59 PM Reply Like
  • techy46
    , contributor
    Comments (7241) | Send Message
     
    Rasgon may have been correct looking back 6 months but the market is forward looking by 6-9 months and his thesis ran out of steam when Intel hiked revenue about 10 days ago. Now the market wants to know if that hike is going to hold true for all of 2014, expand or erode. Then there's all that 14nm and SOFIA news that's coming before the end of 2014 and continuing into 2015. Sorry Stacy, you lost.
    27 Jun 2014, 12:25 AM Reply Like
  • Disenchanted
    , contributor
    Comments (189) | Send Message
     
    He is a Rasgonner. Or a slow learner.
    27 Jun 2014, 03:20 AM Reply Like
  • droubal
    , contributor
    Comments (62) | Send Message
     
    Too late to buy now. Wait for the next price drop. Look at a long-term chart. The price is quite volatile of 2 year spans. Buy when it gets close to 20 again.
    27 Jun 2014, 09:22 AM Reply Like
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