RESEARCHINTC3 months ago9.3Kviews

Intel: this is a pricing structure, not a cycle

Contract pricing held firm while the commodity tier rolled over. There is no second source at the required specification, which makes this structural rather than cyclical.

Hana Ito@hana_ito

Evidence · 4 cards

The case

Intel: this is a pricing structure, not a cycle

Contract pricing held firm while the commodity tier rolled over. There is no second source at the required specification, which makes this structural rather than cyclical.

The edge

The Street says

Consensus models the cycle turning in the second half
Sell-side target clusters within 8% of spotAuto

I say

The turn already happened in order intake two quarters ago
My number is 14% above the street on the out yearCreator est.

Path to target

Entry: 23.66Auto
Out-year EPS: +18% vs consensusCreator est.
Exit multiple: 22x, in line with the last cycle peakCreator est.
= Target: 26.82Creator est.

The steelman

The counterpoint

“If this were as mispriced as you say, the largest holders would have added rather than trimmed.”

The counter-counterpoint

They trimmed for position-limit reasons that show up in the 13F footnotes. Two of the three added in the vehicles that do not have the limit.

The analyst chose to be challenged and answered on the record.

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Discussion · 6

Sam WhitfieldJUN 26

Not convinced, but well argued. The exclusivity window is the part the market keeps mispricing. What is the base rate on this kind of setup working?

Sam WhitfieldJUN 26

Good piece. The distinction between adequate reserves and the earnings path is well made. What is the level where you would walk away?

Hana ItoAuthorJUN 25

Fair challenge. Invalidation is a close below the lock price on volume, and I should have written that into the card rather than leaving it implicit. (691)

Omri ShakedJUN 26

This lines up with what I saw in the filings. The utilisation assumption is where I disagree. Interested in what the kill switch looks like in practice.

Yael BrennerJUN 24

This is the clearest write-up I have seen on the name. The comp table did more work for me than the narrative did. How much does this depend on the macro cooperating?

Hana ItoAuthorJUN 24

Fair challenge. Invalidation is a close below the lock price on volume, and I should have written that into the card rather than leaving it implicit. (687)