Intel (INTC) shares slumped lower Wednesday after analysts at Citigroup cautioned that the chipmaker could pre-announce weaker-than-expected second quarter earnings and lowered their near-term profit estimates.
Citigroup analyst Christopher Danely, who carries a 'neutral' rating on the stock with a price target of $45, said his bear case for the stock is starting to form more quickly than expected, citing comments from CFO David Zinsner at the Bank of America Securities Global Technology Brokers Conference.
Danely is holding onto his earlier forecasts for 2023 earnings of $1.55 per share, a 34% year-on-year decline, but added that "we now expect Intel to negatively pre-announce or miss 2Q22 guidance and are lowering estimates accordingly."
His new 2022 revenue forecast is $2.5 billion lower, at $91.9 billion, with earnings pegged at $2.33 pe share, down 30 cents from his earlier estimate.
Intel shares were marked 5.23% lower in late afternoon trading Wednesday to change hands at $41.25 each, a move that would extend the stock's year-to-date decline to around 22.5%.
Intel said in late April that supply chain disruptions, coupled with China's Covid lockdown, would clip near-term revenues to around $18 billion and deliver a weaker-than-expected bottom line of 70 cents per share for the second quarter.
Intel, which unveiled a $5.4 billion takeover bid for Tower Semiconductor (TSEM) earlier this year, told an investor conference in February that gross margins would fall by 6 percentage points this year, to 52%, before slowly improving by 2026 -- a year behind its prior forecast -- when revenues from its new investments will start to accelerate.
Intel is also planning to invest $20 billion into two chipmaking plants in Ohio - following on from similar investments in Arizona last March -- that it hopes have have up-and-running within three years as it expands domestic production.
