Intel Stock Price Forecast September 2021 – Time to Buy INTC?

Intel stock (INTC) is up 8.5% in 2021 and is underperforming the markets. While US stock markets hit their new closing high on Friday, INTC stock is down over 21% from the 52-week highs that it hit earlier this year.

Intel stock is currently in a bear market territory, having fallen over 20% from the peak. Chipmaker stocks have looked weak despite the ongoing chip shortage situation. What’s the forecast for INTC stock and is it a good buy now?

Intel stock recent developments

Last week, Intel announced that the US Defense Department awarded it an agreement for providing commercial foundry services as part of the first phase of its multi-phase Rapid Assured Microelectronics Prototypes – Commercial (RAMP-C) program. As part of the agreement, Intel along with other US companies including IBM would lend support to the US government’s efforts for designing and manufacturing assured integrated circuits domestically by establishing a semiconductor IP ecosystem to develop and fabricate test chips based on Intel 18A

Notably, the Biden administration has put a lot of impetus on semiconductor production in the country. The recent supply-side issues in the semiconductor industry, which have led to production losses for US companies like Ford and General Motors, have only amplified the administration’s efforts to support chip production in the country.

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IDM 2.0

Intel is working on a growth strategy called IDM 2.0 under the leadership of its CEO Pat Gelsinger. It has announced $20 billion investments towards building chip factories and is also looking at making chips for others at its facility. Meanwhile, not all are convinced that the IDM 2.0 would be the turnaround for INTC stock that many bulls have been expecting.

“Following the appointment of Patrick Gelsinger as Intel CEO we upgraded the stock to Neutral given the opportunity for a strategic change. However, we do not believe IDM 2.0 provides an answer to market share losses to AMD,” said Atlantic Equities. The brokerage’s analyst Ianjit Bhatti lowered Intel’s target price from $63 to $43 while downgrading the stock from neutral to underweight.

Intel stock price forecast

Wall Street analysts don’t look too bullish on Intel stock. Of the 39 analysts polled by CNN Business, only 14 rate INTC as a buy or some equivalent. 15 analysts have a hold rating while ten analysts rate it as a sell. The stock has a median target price of $60 which is a premium of 11.4% over current prices. The stock’s highest target price of $85 is a premium of 57.8% while the street low target price of $40 is a discount of 25.8%.

Last week, JPMorgan Chase had reiterated its bullish bet on INTC stock and assigned a target price of $78.

INTC stock price technical analysis

Intel stock does not look too good on the charts. The stock fell below the 50-day SMA (simple moving average) and the price channel has been a strong resistance since then. The stock also trades below the 100-day and 200-day SMA, which is another bearish indicator. There was also a death cross formation in the stock earlier this month after the 50-day SMA fell below the 200-day SMA. While the death cross is a lagging indicator and is preceded by a downwards price action, it often signals a long-term bear market.

Looking at the other technical indicators, while the MACD (moving average convergence divergence) gives a buy signal, the 14-day RSI (relative strength index) is a neutral indicator and signals neither overbought nor oversold positions.

Intel stock price valuation

Intel stock trades at an NTM (next-12 months) PE multiple of almost 13x. The multiples have averaged 12.5x, 12x, and 12.4x over the last one year, three year, and five-year periods. The current valuations are largely in line with the historical averages. That said, Intel stock hasn’t been very rewarding for investors, at least when compared to peers like AMD. Over the last ten years, INTC stock has underperformed AMD by a wide margin.

Intel has been gradually losing market share to AMD. Also, Apple has pivoted from Intel to its own chips for Macs. Meanwhile, INTC stock is a play on the turnaround under Gelsinger. The company is working to revive growth after years of sagging sales. According to JPR (Jon Peddie Research), Intel increased its market share in the GPU market in the second quarter, which is a positive development.

INTC looks a good bet

The investments that INTC has announced would pay off in the long term. There are risks that the chip industry, which is currently severally short of supply, would become oversupplied over the next couple of years. Some of the chipmakers indeed have been conservative with their capex plans in a bid to not flood the market with more capacity. However, given the digital transformation, the demand for chips could continue to grow.

Intel pays a healthy dividend yield of 2.6% which is higher than that of the S&P 500. Overall, INTC stock is a bet on the chip shortage situation and the turnaround strategy that is being played out under Gelsinger.

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