Intel Earnings Preview: First Quarter 2009

Intel [[INTC]] is scheduled to report first quarter 2009 results after the market closes on Tuesday, April 14. Based on our analysis, we at are expecting INTC to report inline results that meet Wall Street’s consensus expectations.


Analyst Expectations

We are forecasting revenues of $7.0 billion and EPS of $.02. This would represent a 28% decline in revenues from last year’s $9.67 billion in the same period. The current analyst consensus calls for revenues of $6.97 billion and $.02 EPS. On January 15, the company provided first quarter guidance for revenues “in the vicinity of $7 billion”.


Intel’s shares have appreciated over the last few weeks in anticipation of a possible earnings beat. However, we remain cautious on the company’s performance given the current economic environment. Demand still appears to be declining as business and consumer spending is cut back.


In addition, we would expect that even if the company’s results exceed Wall Street’s expectations, management will continue to be very conservative in their guidance.


Share Performance

Intel’s shares are up 6% since the beginning of the year, making it one of only four Dow components to post gains this year. However, last year their stock dropped 45% as they underperformed the 34% decline in the Dow Jones index.



Shares are now trading at 19x consensus 2010 EPS estimates. This is a healthy premium to the relative valuations of their peer group. Based on the current valuation levels and the expected economic challenges still facing the company, we would not recommend buying the stock at this time.


Recommendation: Sell with a $12 price target.


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