Why Intel (INTC) is Moving Higher on Tuesday (Update 1)

Updated from 9:26 a.m. EST to include further details on JPMorgan reasoning and to update stock price. 

NEW YORK (TheStreet) -- JPMorgan turned bullish on Intel  (INTC) on Tuesday, upgrading the stock to "overweight" from "neutral" and increasing its price target to $29 from $20.

"We believe the PC market will remain relatively stable in 2014, and we believe Intel's new CEO [Brian Krzanich] will continue to provide realistic guidance on focus on areas where Intel has an advantage -- thereby improving margins and returns," wrote analyst Christopher Danely in the report. 

On Monday, Goldman Sachs said it expects the semiconductor maker's fourth-quarter results to be greater than the midpoint of guidance. 

Analysts polled by Thomson Reuters anticipate net income of 52 cents a share on $13.72 billion in revenue for the fourth quarter ended December 2013. 

By early afternoon, shares had gained 3.4% to $26.36.

TheStreet Ratings team reiterates INTEL CORP as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate INTEL CORP (INTC) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • INTC's revenue growth has slightly outpaced the industry average of 9.7%. Since the same quarter one year prior, revenues slightly increased by 0.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Although INTC's debt-to-equity ratio of 0.24 is very low, it is currently higher than that of the industry average. To add to this, INTC has a quick ratio of 1.65, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for INTEL CORP is currently very high, coming in at 76.84%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.87% is above that of the industry average.
  • Net operating cash flow has increased to $5,731.00 million or 11.34% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -11.34%.

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