Intel’s stock is down after Lip-Bu Tan failed to offer quick fixes in a recent speech. But analysts saw positive aspects to his approach in the new role.
Intel shares were falling Tuesday after new CEO Lip-Bu Tan did not offer any quick fixes to turn around the chip giant.
Intel Corp. Chief Executive Lip-Bu Tan just had his first big chance to wow the investment community, but his speech at Intel’s partner conference seemed to emphasize that there are no quick fixes for the company’s challenges.
But analysts saw positives following Tan’s first public appearance since taking over the CEO spot about two weeks ago. They praised his humbler approach to the role, which included asking Intel’s customers in his keynote Monday afternoon to give him their feedback, even if that sometimes means harsh criticism.
Truist Securities analyst William Stein described Tan’s comments as “the most constructive message we’ve heard from Intel in … for as long as we’ve covered the company.”
In a note to clients, Stein said: “Starting with culture, rather than a list of products or manufacturing nodes, is a breath of fresh air.”
That’s not enough to garner a buy call on the stock, however. Stein reiterated a hold rating with a price target of $21, although he added that he was impressed with Tan’s commitment to establishing a more start-up-driven culture from the first day on the job.
When it comes to manufacturing, some analysts were also encouraged by Tan’s comments that he will work with the Trump administration, which is seen as a big advocate for domestic chip making.
Stifel Research analyst Ruben Roy said that Tan’s imprecise language on that topic was a possible indicator that Intel is considering partnerships to run its manufacturing facilities, as had been reported earlier this year. Tan only said that he looked forward to “working closely with [the Trump administration] to advance our shared goals.”
In a note to clients in which he also reiterated a hold rating, Roy said: “This could mean a variety of outcomes and we think the vagueness suggests some of the recent rumors around partnerships could hold validity in being considered.”
Bernstein Research analyst Stacy Rasgon noted that Tan is known for looking to “underpromise and overdeliver,” which Rasgon said makes the most sense right now for Intel. “At least he clearly does not suffer from the almost delusional optimism that torpedoed his predecessor,” Rasgon said in a note to clients.
Tan also said he will provide more details about Intel’s foundry business at its Direct Connect event on April 29, which Stifel’s Roy described as another potential catalyst for the stock.
Investors appear a bit skeptical that Tan will indeed overdeliver, at least in the very near term. Intel shares fell 2.9% on Tuesday but were still up about 10% so far this year.
Comments