Intel shares rise again while Wall Street praises change in CEOs

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Investors should take note when a group of financial analysts – who are often obsessed with indifferent issues such as changes of hundreds of a percentage point in gross margins – change their equity estimates to a change in leadership.

This is what happened Thursday, after Intel said CEO Bob Swan would be succeeded by VMware CEO Pat Gelsinger, a

Intel

alumnus, on 15 February. Analysts like the switch.

Intel (ticker: INTC) closed 4% at $ 59.25 after hitting a 7% advance on Wednesday.

Ambrish Srivastava, an analyst at BMO Capital Markets, raised its target for the share price to $ 70 early on Thursday. His reasoning revolves around Gelsinger’s experience at Intel, where he worked for 30 years, and at VMware, which he has managed since 2012.

“Although we do not expect any major changes in the short term, the wealth of experience Pat Gelsinger has gained from his previous tenure at Intel, as well as his experience managing VMware, but we believe he is the right person to do the right thing. can address frightening, but not insurmountable challenges that Intel faces, ”Srivastava wrote.

The analyst added that even due to the number of disappointments that Intel has experienced, even a few babies need to drift stocks upwards in the right direction. He also pointed to the success of an Intel competitor,

Advanced Micro Devices (AMD),

led by Lisa Su, who Barron’s is one of the best CEOs in the world.

Atlantic Equities also raised its target price on Intel shares to $ 55 from $ 36. Atlantic analyst Ianjit Bhatti upgraded the stock to the equivalent of a Hold’s, arguing that the company expects to take its own lead for the fourth quarter. He said Gelsginer is a proven CEO, given his time at VMware – he allegedly tattooed the company name on his arm when he accepted the job – and he has a deep understanding of Intel and the chip -undertaking.

“We are upgrading to Neutral given the caliber of Intel’s new CEO, the possibility of more drastic strategic changes and our expectation that the market will be willing to explore any negative news flow in the short term while formulating and implementing a new strategy. be, “Bhatti wrote.

Morgan Stanley raised its target price from $ 60 to $ 70 and upgraded the stock to the equivalent of a buy. Analyst Joseph Moore warns investors in a Thursday note that there are no easy solutions to the company’s battle, but says the risks could diminish over time with the help of new leadership.

Major investment strategist Eric Ross of Cascend Securities did not join in the cheers so quickly. In a Thursday note, he wrote: “Intel shares may not be on Bob Swan’s departure – it’s just acknowledging the issue.”

Ross says that Swan was only part of the weakness of the company, and that the underlying problem is the engineering challenges. It can take more than three years to correct – and even that is an optimistic assessment, he says. As Intel struggled,

Taiwan Semiconductor Manufacturing

(TSM) has jumped ahead in manufacturing technology, a setback from Intel may never recover, he says.

Shares of Intel have yielded about 2% over the past year as the PHLX Semiconductor index has risen more than 50%.

Write to Max A. Cherney by [email protected]