Intel shares are rising again while Wall Street praises the change in CEOs

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

It happened on Thursday, after Intel said that CEO Bob Swan would be succeeded by VMware CEO Pat Gelsinger,

Intel

ex-student on February 15. Analysts like the change.

Intel shares (ticker: INTC) closed up 4% to $ 59.25, after a 7% advance on Wednesday.

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

“While we don’t expect big changes in the short term, the wealth of experience that Pat Gelsinger brings from his previous tenure at Intel, as well as his experience in managing VMware, we believe he is the right person who can handle the scary, but insurmountable challenges that Intel faces, ”wrote Srivastava.

The analyst added that due to the number of disappointments that Intel encountered, even a few baby steps in the right direction should propel stocks upwards. He also pointed to the success of an Intel rival,

Advanced micro devices (AMD),

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

Atlantic Equities also raised its target price for Intel shares, raising it from $ 36 to $ 55. Atlantic analyst Ianjit Bhatti raised the shares to the equivalent of Hold, arguing that the company hopes to outperform their own projections for the fourth quarter. He said Gelsginer is a proven CEO for his time at VMware – he allegedly pretended to tattoo the company name on his arm when he took office – and has a deep understanding of Intel and the chip business.

“We upgraded to Neutral due to the caliber of Intel’s new CEO, the possibility of more radical strategic changes and our expectation that the market will be willing to look through any short-term negative news flow while a new strategy is formulated and implemented ”, Bhatti wrote.

Morgan Stanley raised its target price from $ 60 to $ 70, and raised the stock to the equivalent of one purchase. Analyst Joseph Moore warned investors in a note Thursday that there are no easy solutions to the company’s difficulties, but said that with the help of new leadership, the risks could decrease over time.

Chief investment strategist Eric Ross of Cascend Securities was not so quick to join the crowd. In a note on Thursday, he wrote: “Intel’s stock shouldn’t go up with Bob Swan’s departure – that’s just admitting the problem.”

Ross says Swan was only part of the company’s weakness and the underlying problem is its engineering challenges. This could take more than three years to fix – and even this is an optimistic assessment, he says. While Intel has struggled,

Semiconductor manufacturing in Taiwan

(TSM) has taken a leap forward in manufacturing technology, a setback that Intel may never recover from, he says.

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

Write to Max A. Cherney at [email protected]