Intel shares are rising again as Wall Street praises the change in CEOs

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Investors should take note when a group of financial analysts, who are often obsessed with arcane issues such as changes in gross margin, make changes to their stock estimates after a change in leadership.

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

Intel

alumnus, Feb. 15. Analysts like change.

Shares of Intel (ticker: INTC) closed up 4% to $ 59.25 after a 7% advance on Wednesday.

BMO Capital Markets analyst Ambrish Srivastava raised its stock price target to $ 70 from $ 50 in early Thursday. His reasoning revolves around Gelsinger’s experience at Intel, where he worked for 30 years, and at VMware, which he has led since 2012.

“While we don’t expect major changes in the short term, the wealth of experience Pat Gelsinger brings from his previous tenure at Intel, as well as his experience with VMware, we believe he is the right person to tackle the daunting, but not insurmountable challenges facing Intel, ”Srivastava wrote.

The analyst added that due to the number of disappointments Intel has encountered, even a few steps in the right direction should propel the stocks up. He also noted the success of an Intel rival,

Advanced Micro Devices (AMD),

under the leadership of Lisa Su, who De Barron has been ranked as one of the best CEOs in the world.

Atlantic Equities also raised its target price of Intel shares, raising it to $ 55, from $ 36. Atlantic analyst Ianjit Bhatti improved shares to the equivalent of a Hold, arguing that the company expects to exceed its own guidelines for the fourth quarter. He said Gelsginer is a proven CEO given his time at VMware (apparently pretending to tattoo the company name on his arm when he took on this job) and that he has a deep understanding of Intel and the business. of the chips.

“We are updating Neutral given the caliber of Intel’s new CEO, the possibility of more radical strategic changes and our expectation that the market will be willing to examine any short-term negative news flow while formulating and implementing a new strategy.” . he wrote.

Morgan Stanley raised its target price from $ 70 to $ 70 and upgraded the shares to the equivalent of a purchase. Analyst Joseph Moore warned investors in a note Thursday that there were no easy solutions to the company’s struggles, but said that with the help of new leadership, risks can be moderated with the passage of time.

Eric Ross, an investment strategist at Cascend Securities, was in no hurry. In a note Thursday, he wrote, “Intel’s shares should not be on the way out of Bob Swan; that only admits the problem.”

Ross says Swan was only part of the company’s weakness and that the underlying problem is its engineering challenges. These could take more than three years to resolve, and even that is an optimistic assessment, he says. While Intel has struggled,

Taiwan semiconductor manufacturing

(TSM) has advanced in manufacturing technology, a setback that Intel may never recover, he says.

Shares of Intel have returned around 2% last year, as the PHLX Semiconductor index has advanced more than 50%.

Write to Max A. Cherney to [email protected]