To The Moon

Intel (INTC) announced on 24/2 (Wed), that it’ll be cutting an additional 112 staff✂️✂️✂️ from its Silicon Valley headquarters, after announcing it’ll ✂️ cut its quarterly dividend by 65.8% to 12.5 cents from 36.5 cents on 22/2 (Wed)‼️This 📰 comes about a month after the company reported disappointing earnings & provided a below-consensus outlook for the year🐻🐻🐻 AMD has been eating Intel’s lunch & it’s not a trend that’s been in place for just a couple of months. It’s been occurring for a while now & we’ve seen that play out in the stock prices, suggesting that INTC might make new 52-Week Lows.

⚠️ INTC’s dividend rate is now at its lowest level in 16 years😰🥵 The record date for the lowered dividend has been set to May 7, while the payday is June 1. The chipmaker cited an uncertain macroeconomic backdrop & a conservative capital allocation strategy for the reduction.

➡️ “Prudent allocation of our owners’ capital is important to enable our IDM 2.0 strategy and sustain our momentum as we rebuild our execution engine,” said CEO Pat Gelsinger. “We remain on track to deliver five nodes in four years and continue to expand the IFS (Intel Foundry Services) customer base.”

Along with the dividend cut, the chip company reaffirmed its guidance for Q1. Revenue is expected to tally between $10.5 and $11.5 billion, while gross margin is forecasted to be 34.1% on a GAAP basis and 39% on a non-GAAP basis. Intel also forecasts unprofitability with an earnings per share loss of 15 cents on a non-GAAP basis.

INTC has fallen 42% over the last 12 months. Morgan Stanley’s analyst is more optimistic about INTC after the chip maker’s decision to reduce its dividend, raising the rating to Equal-weight from Underweight on 23/4 (Thu) but isn’t ready to recommend buying yet. Price🎯 was lowered to $28 from $29.50 as the prior price🎯 was based on the previous 5%+ dividend yield, which was attractive to income-oriented investors. With a substantial portion of the dividend now gone, this new $28🎯 is based on traditional valuation measures.

➡️ The analyst said INTC paying dividends to shareholders didn’t make much sense, because the company needed a lot of financial resources to build factories and pursue its foundry strategy—where it plans to make chips for other semiconductor companies.

➡️ “Speculation about dividend reduction has been painful for the stock, but it’s the right thing to do,” he wrote. “With a reduced dividend and valuation support, we see limited downside at current levels.”

The current consensus among 39 polled investment analysts is “Hold”. However, it is more Sell & Underperform Ratings-9 than Buy & Outperform Ratings-5‼️

The 31 analysts offering 12-month price forecasts for INTC have a median🎯 of $28, with a high🎯 of $45 & a low🎯 of $17.

Based on the above suggesting more downsides than upsides, I'm 🐻-ish about INTC & will only consider buying if it drops below $20 or if there's improvements in its next 2 earnings. 

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