Intel Stock Is in a ‘Catch-22' Scenario. How Should You Play INTC Here?
Intel (INTC) shares closed roughly flat on Tuesday after a senior Loop Capital analyst initiated coverage of the semiconductor giant with a 'Neutral' rating only.
In his research note, Gary Mobley announced a $25 price target on INTC, indicating limited upside as 'the catch-22 situation for Intel is obvious.'
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That said, Intel stock is currently up more than 30% versus its year-to-date low set in early April.
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Intel Stock is Grappling With an Internal Strategic Conflict
Loop Capital assumed a dovish stance on INTC shares this morning primarily because the firm is stuck in an internal strategic conflict.
According to the investment firm, Intel must tap on Taiwan Semi's (TSM) advanced manufacturing processes to design sophisticated chips that stand a chance against rivals like Nvidia (NVDA) and Advanced Micro Devices (AMD).
However, the company's foundry business will take a meaningful hit if INTC chooses to outsource chip manufacturing.
'If Intel Foundry can't rely on volume from Intel Products, the company as a whole will struggle to cover fixed costs,' analyst Gary Mobley told clients in a report on Tuesday.
Management Must Find a Workaround to Free INTC Shares
Mobley recommends caution in buying Intel shares as the company's foundry business is actually a 'headwind' for its products segment.
More importantly, the expert believes INTC is rather restricted in terms of 'options to detach, or de-consolidate Intel Foundry' as well.
In his research note, he went on to confirm that Loop Capital will refrain from turning constructive on INTC stock unless the management finds a workaround to these competing operational mandates of the two core businesses.
How Wall Street Recommends Playing Intel Corp in 2025
The aforementioned challenges are not at all lost on other Wall Street firms either. In fact, many have a price target on Intel stock that actually trails Loops Capital's.
According to Barchart, the consensus rating on INTC shares sits at 'Hold' only with the average price target of about $22.68, indicating potential downside of more than 2% from current levels.
www.barchart.com
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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