Credit Suisse Group Analyst John Pitzer says Intel Corporation (INTL) should deliver earnings “well north” of $3 per share. He says his thesis hinges not on Intel’s PC or handset businesses, but on the company’s potential growth in data centers.
“When you think about data analytics, Intel enables data analytics through their server processors, and they dominate this market with over 90% market share,” Pitzer says. “A couple of years ago they made $0.70 or $0.80 a year of earnings power just out of their data center business; today it’s closer to $1. We think in our $3 earnings potential number, they could do north of $1.50 just out of DCG alone.”
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Pitzer says Intel’s PC business is stabilizing, but he believes it will be more profitable than bears argue. On the mobile side, Pitzer says Intel is still in “investment mode.” He says Intel’s mobile business is losing $0.55 a year in earnings, but he believes the segment can get to breakeven, which will be earnings accretive to the overall business.
“We think if that were to happen, and you put a 12 multiple on that, you have a stock that’s in the mid-30s, which for a large-cap stock like Intel that’s a lot of market cap to add between here and now, which is the reason why we like it,” Pitzer said.
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