Intel stock rallies further as CEO switch fuels hope of ‘light at the end of the tunnel’

Intel stock rallies further as CEO switch fuels hope of ‘light at the end of the tunnel’

Intel Corp. won praise for replacing its chief executive as multiple analysts upgraded the chip giant’s stock.

Shares of Intel

were up 5.1% in Thursday morning trading, building on gains of 7.0% from Wednesday’s session after the company announced that VMware Inc.

Chief Executive Pat Gelsinger would be taking over Intel’s top post.

Intel has suffered in recent years from a series of missteps that caused the company to lose its leadership in process technology. Even as analysts seemed to agree that there is no fast answer to the company’s current challenges, they’re upbeat that Gelsinger’s technological experience and decades of prior experience at Intel make him well suited to tackle the problems ahead.

“With 30 years at Intel, including in the Chief Technology Officer role, then a successful stint at VMware, he brings more relevant experience to the unique requirements of the Intel job than any other candidate,” Morgan Stanley analyst John Moore wrote.

He upgraded the stock to overweight from equal weight and raised his price target to $70 from $60 in a Thursday morning note titled: “No quick fix, but with Gelsinger, there is light at the end of the tunnel.”

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BMO Capital Markets analyst Ambrish Srivastava took a similar view. “We have seen time and again how the right person at the helm can affect change,” he wrote. “While we do not expect any near-term big changes, the richness of experience that Pat Gelsinger brings from his prior tenure at Intel as well as his experience running VMware, we believe he is the right person who can address the daunting, but not insurmountable challenges that Intel faces.”

Srivastava upgraded Intel’s stock to outperform from market perform and raised his price target to $70 from $50, arguing that “even a few incremental right steps ought to serve as a catalyst for shares.” At the same time, he downgraded shares of rival Advanced Micro Devices Inc.

shares to underperform from market perform, writing that while AMD has executed very well lately, its shares also seem to have benefited from weak execution at Intel.

Another upgrade came from Cowen & Co. analyst Matthew Ramsay, who wrote of the “equilibrium restored” at Intel now that an “Intel-grown technologist” is back to leading the company.

“It is hard to overstate the importance of Mr. Gelsinger’s hire, not just to Intel, but the US technology/semiconductor industry,” he said in a note to clients. “After years of letting its manufacturing leadership evaporate, we have long argued that what was once the largest semiconductor supplier in the world needed a technologist leader to solve its technology problems … and we got just that. “

In Ramsay’s view, the hire suggests a “a renewed focus on the internal 7-nanometer and 5-nanometer road maps that are of paramount importance to Intel’s turnaround and the USA’s technological leadership.” Ramsay raised his rating on Intel’s stock to outperform from market perform and increased his price target to $75 from $50.

Of the 38 analysts tracked by FactSet who cover Intel’s stock, 13 have buy ratings, 16 have hold rating, and nine have sell ratings, with an average price target of $57.03.

Intel shares have gained 11.2% over the past three months as the Dow Jones Industrial Average

has risen 9.4%.

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