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Intel May Be `Dead Money' as Wall Street Awaits CEO Successor

Intel May Be `Dead Money' as Wall Street Awaits CEO Successor

Intel Corp.’s removal of Brian Krzanich as chief executive isn’t being greeted well by investors, who drove down the stock by as much as 2.2 percent intraday. The chipmaker "could be dead money until we get clarity on who the new CEO will be," Evercore ISI analyst C.J. Muse writes in a note.

Bank of America sees the executive changeover as a distraction, especially as Intel previewed its second-quarter results with record sales of about $16.9 billion. Analyst Vivek Arya says Krzanich’s resignation is a "fresh start opportunity" to attract outside talent, though chief financial officer Robert Swan will step up in the interim.

Here’s what analysts are saying:

Evercore, C.J. Muse

Amid fear of rising competition from Advanced Micro Devices in services and a changing landscape, "loss of leadership today is clearly not a positive as Intel certainly has more wood to chop."

The good news is that Intel "is in excellent hands" with Robert Swan. "We do hope the Board of Directors will consider him for the CEO role."

The loss of strategic leadership is a clear headwind. "Intel shares could be dead money until we get clarity on who the new CEO will be and timing of start-date. So near-term, we do see better upside elsewhere."

Outperform, $64 price target

Bank of America Merrill Lynch, Vivek Arya

Demand trends for Intel are strong near-term, and CEO transition could provide a fresh start opportunity "to attract new blood from outside the company."

Intel did not provide segment details in results preannouncement, but Bank of America suspects second quarter was a continuation of strength from the first quarter across personal computers and data centers.

"Substantially credit" Robert Swan for many of Intel’s improved initiatives, including better cost discipline and communication with Wall Street; "expect no hiccups in execution during the CEO transition process."

Buy, $70 price target

Wells Fargo Securities, Aaron Rakers

Despite not including specific details on its upside, Intel’s preannouncement implies continued data center strength.

"Investor focus will be on the company’s expectations of sustainability looking through" the second half of 2018 and into 2019.

Outperform, $65 price target

Cascend, Eric Ross

Data center is growing faster than the market, and foresees revenues within the segment driving Intel through 2018 and beyond.

Buy, $65 price target