Intel Corp INTC

Intel reported fourth-quarter results that significantly exceeded its guidance, primarily due to stronger than expected PC demand related to the ongoing work- and learn-from-home trends stemming from COVID-19. Due to the impending CEO transition from Bob Swan to Pat Gelsinger (effective Feb. 15), management did not elaborate on its outsourcing plans or provide full-year guidance. We view this decision as prudent, as it will allow Gelsinger some time to assess the current state of affairs for Intel’s 7-nanometer process technology before the firm’s April earnings call. One key point offered by Gelsinger was that he expects the majority of products sold by Intel in 2023 to still be manufactured internally. Shares of wide-moat Intel were down nearly 5% after hours, which we attribute to the aforementioned lack of clarity on outsourcing. That said, shares are up 41% from late October lows and are trading at a more modest discount to our unchanged fair value estimate of $65 per share.