Intel’s stock is rising again as Wall Street praises the change of CEOs

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Investors should take note when a group of financial analysts – who are often obsessed with arcane issues, such as changes in percentage points in gross margins – make changes to their stock estimates after a change in management.

That happened on Thursday, after Intel said that CEO Bob Swan will be succeeded by VMware CEO Pat Gelsinger, a

Intel

graduate, on February 15th. Analysts like the switch.

Shares of Intel (ticker: INTC) closed down 4% to $ 59.25 after advancing 7% on Wednesday.

BMO Markets Capital analyst Ambrish Srivastava raised his stock price target to $ 70 from $ 50 early Thursday. His reasoning revolves around Gelsinger’s experience at Intel, where he worked for 30 years, and at VMware, which he has led since 2012.

“While we do not expect major changes in the short term, the wealth of experience that Pat Gelsinger brings from his old position at Intel, as well as his experience in managing VMware, we believe he is the right person to address the daunting, but not the challenges of Intel is facing the challenge, ”Srivastava wrote.

The analyst added that due to the number of disappointments Intel has encountered, even a few steps for babies in the right direction should propel the actions up. He also highlighted the success of an Intel rival,

Advanced Micro Devices (AMD),

under the leadership of Lisa Su, who Barron’s has been listed as one of the best CEOs in the world.

Atlantic Equities also raised its target price on Intel shares to $ 55 from $ 36. Atlantic analyst Ianjit Bhatti upgraded the stock to the equivalent of a Hold, saying the company expects to raise its own guidelines for the fourth quarter. He said Gelsginer is a proven CEO, given the time he spent at VMware – he allegedly faked the company name tattoo on his arm when he took over the job – and has a deep understanding of Intel and the chip business.

“We are moving to Neutral, given the caliber of the new Intel CEO, the possibility of more radical strategic changes and our expectation that the market will be willing to analyze any short-term negative news flow, while a new strategy is formulated and implemented.” said Bhatti. wrote.

Morgan Stanley raised its target price to $ 70 from $ 60 and updated the stock to the equivalent of a Buy. Analyst Joseph Moore warned investors in a note on Thursday that there were no easy solutions to the company’s struggles, but said that with the help of new management, the risks may moderate over time.

Cascend Securities chief investment strategist Eric Ross was not as quick to join the applause. In a note on Thursday, he wrote: “Intel’s shares should not be at the start of Bob Swan’s departure – this is just an admission of the issue.”

Ross says Swan was only part of the company’s weakness and that the core issue is its engineering challenges. It could take more than three years to fix – and even that is an optimistic assessment, he says. As Intel struggled,

Taiwan Semiconductor Manufacturing

(TSM) has jumped ahead of it in terms of manufacturing technology, an obstacle from which Intel can never recover, he says.

Intel shares have returned about 2% in the last year, as the PHLX Semiconductor index has advanced by more than 50%.

Write to Max A. Cherney at [email protected]