Who should you listen to?
With the PC market declining, many analysts associate such decline with Intel's future decline. But is Intel (NASDAQ:INTC) solely a PC company? With the chip market growing drastically perhaps Intel is simply at a junction facing the future. To gain a better perspective let's look at two varying analyst recommendations on Intel, while taking analyst credibility into consideration:
Merrill Lynch, Vivek Arya
Recommendation: Buy, April 17
Vivek believes Intel has begun its mobilization process, particularly with its tablet products. Beyond its products Vivek highlights Intel's successful cloud servers and customer loyalty. That in mind, Vivek reveals that Intel has not been drastically impacted by the PC market downfall, but has been able to diversify its products and developments. Vivek's current recommendation has thus far gained 5.7%, benchmarked to the S&P500.
To gain a better perspective of both the stock and the analyst credibility, it is important to get a long term view: In 2011, Vivek predicted that chip sales will grow 8% a year through 2014, in his recommendation to Buy Intel. Indeed Vivek predicted correctly the chip industry is growing and diversifying beyond computers but towards mobilization and even towards the automobile industry. Furthermore, in
2011 Vivek highlighted the benefit of the new Intel-Google (NASDAQ:GOOG)partnership which has most likely helped Intel 'survive' the slow disappearance of the PC.
TipRanks Analyst statistics:
o Ranking: 151 from 1917 analysts with measurable recommendations
o Recommendations performance: 65% of recommendations have outperformed the S&P500.
o Recommendations return: +3.8% average return of analysts' recommendations benchmarked against S&P500
Morgan Stanley, Joseph Moore
Recommendation: Sell, April 15
Moore does not see Intel growing in the mobile market. He states that its manufacturing is effective and it can grow with its current tablet business, but does not see it growing effectively in the mobile market, unless it changes its vision.
Moore initiated his Sell in May 2012, stating that Intel's growth will be limited without ASP growth. He believed Intel's stock peaked and will continue to fall from there. To gain a better perspective as to Moore's recommendation credibility, we can see that Moore recently
recommended to his clients to Buy Sandisk Corp and has since lost -2.9%., casting further doubt on the strength of his
recommendation on Intel.
TipRanks Analyst statistics:
o Ranking: 1033 from 1917 analysts with measurable recommendations
o Recommendations performance: 25% of recommendations have outperformed the S&P500.
o Recommendations return: +-.1% average return of analysts' recommendations benchmarked against S&P500
With recommendation and success statistics in mind - which recommendation is best to listen to?
Comparing Vivek and Moore's recommendation and success statistics, provides the investor with an opportunity to gain a full understanding of the market and Intel specifically. Intel has developed it's tablet and mobile industry relying upon, mainly, it's chip manufacturing and technology. The sector, contrary to the PC, has developed and grown into various other markets including automobiles, giving way to greater potential for Intel. It is another case, when following one recommendation can lead an investor to profit, while following another without knowing recommendation history or success rate, can lead an investor to financial loss (the investor will most likely still have his job).
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: TipRanks Manager