Intel Corporation's Upgrade: Here's What You Need to Know

Does this analyst make a good case or from is it just more noise Wall Street?

Brian D. Pacampara, CFA
Brian D. Pacampara, CFA
Apr 3, 2014 at 10:26AM
Technology and Telecom

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Intel Corporation (NASDAQ:INTC) gained about 2% today after Piper Jaffray upgraded the chip behemoth from neutral to overweight.

So what: Along with the upgrade, analyst Ruben Roy planted a price target of $30 on the stock, representing about 16% worth of upside to yesterday's close. So while contrarians might be turned off by Intel's rising price over the past month, Roy's call could reflect a strengthening sense on Wall Street that its growth potential gives it plenty of room to run.

Now what: According to Piper, Intel's short and long-term risk/reward trade-off is rather attractive at this point. "From a longer-term perspective, we believe that INTC continues to position itself to benefit from data center market growth," said Roy. "We also believe that INTC is making strides on the mobile processor front and, while profitability for the business will likely remain a headwind for some time, we do expect INTC to gain market share traction in 2014 and improve profitability in 2015." When you couple that upbeat outlook with Intel's still-juicy 3.5% dividend yield, it's tough to disagree with Piper's bullishness.