UBS: The market focuses on Intel's 14A process "narrative," raising the target price to $49

UBS report indicates that despite tight supply, Intel (INTC.US) is expected to see an increase in its fourth-quarter performance due to strong demand for personal computers and servers, and believes that the market's expectations for the company's guidance for the current fiscal quarter ending in March this year are reasonable. The firm anticipates that Intel's outlook for this year will be mixed but gradually improving, as the current quarter is expected to be the most severe period for capacity issues. Historical experience shows that rising memory prices will suppress some positive momentum in the short-term personal computer market.

The firm expects that during the earnings release period, Intel will discuss gross margins more broadly (expected to fall below 40% to the 60% range, with the firm predicting around 38% for the year), total/net capital expenditures (the firm predicts approximately $19 billion/$12 billion or a slight increase for both), as well as operating expenses of $16 billion in line with previous guidance. More critically, the narrative surrounding the foundry business is expected to improve gradually, with potential discussions with several clients regarding 14A process collaborations, including Nvidia (NVDA.US) in the gaming sector, as well as potential clients such as Google, Broadcom (AVGO.US), and Apple (AAPL.US).

The firm raised its target price for Intel from $40 to $49, maintaining a "Neutral" rating