What happened
Shares of Intel (INTC +0.00%) dropped 12.1% in August, according to data provided by S&P Global Market Intelligence. That continued the semiconductor stock's steady downward spiral. Shares are now down nearly 40% this year.
While the issues plaguing the stock haven't gone away, Intel did take a significant step toward addressing a big concern last month.
NASDAQ: INTC
Key Data Points
So what
Overall, August was a light month on the news front for Intel. One notable item came from Moody's. While the credit rating agency affirmed Intel's A1 rating, it revised its outlook from stable to negative. Moody's analyst Richard Lane wrote that the rating agency changed its outlook due to Intel's "ongoing challenges to consistently execute on its manufacturing and product development in the face of a weakening macro environment, strong competitive challenges, and supply chain disruptions."
Those difficulties also led a couple of analysts to put out negative notes on the stock. Ingo Wermann of DZ Bank cut shares from hold to sell while setting a $30 price target. Meanwhile, Northland analyst Gus Richard wrote in a note to clients that Intel can't catch up to its competitors in server CPU leadership until 2024. Despite that view, Richards does believe that the market has sold shares of Intel off too much. The analyst pegs the company's breakup value at $57 a share. As a result, Richard sees "little downside risk and a lot of upside." That led the analyst to keep his outperform rating and $55 price target on the stock.
Meanwhile, Intel took a significant step toward addressing one of its biggest issues: how it intends to finance its massive manufacturing capacity expansion plan. The company unveiled a first-of-its-kind semiconductor co-investment program, securing Brookfield Infrastructure (BIP +0.85%) (BIPC +0.00%) as its first partner. They're going to split the $30 billion cost of building two new fabrication facilities in Arizona. Brookfield has already lined up funding for its share of the cost as it continues its push into the data infrastructure sector. This partnership will increase Intel's financial flexibility and balance sheet capacity so that it can maintain and grow its dividend during the build-out phase.
NYSE: BIPC
Key Data Points
Now what
Intel continues to face competitive and supply chain headwinds, which have weighed on its stock price. It's investing heavily to get back on track. It recently secured a funding partner to help share that load, which should take some pressure off its balance sheet. While Intel has a long road ahead, it seems to be on the right track. In the meantime, investors get paid well while they wait for Intel's strategy to pay off.
