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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: A. Edwards who wrote (176557)	1/15/2004 9:07:23 AM
From: PCSS	Read Replies (1) \| Respond to of 186894

Goldman-Sachs ALERT this morning: We would continue to buy Intel shares after very solid Q4 results and Q1 guidance which we expect will prove conservative. For the moment our 2004E EPS remains unchanged at $1.25. There continues to be an upside bias to Intel's gross margins as positive product mix momentum that drove ASPs up slightly last quarter should continue, and costs will likely come down faster than expected with the ramp of the 90nm/300mm Prescott product. Our Q1 revenue estimate should also prove conservative as microprocessor units would have to decline more in Q1'04 than in Q1'03, with PC units expected to decline in line with 2003, even amidst an IT spending environment that has clearly firmed. Very few of the stocks we cover at the moment should be considered inexpensive on an absolute basis. However, in Intel's case we believe that while it is near normalized fair value of $33, it is attractively valued relative to the semi group, and will continue to appreciate as long as estimate revision momentum persists. INTC stock is trading at 26.7x CY04E EPS and 6.0x on a 2004E EV/Sales basis. These numbers compare with 36.7x and 5.7x for the group, respectively. Based on Intel's 2004E ROE of 19.9%, versus the group at 13.2% we believe it could support a higher relative multiple. But even if it were to just hold its multiple, the stock should move into the low $40's during 2004 as its forward 12-month estimates trend up from the current $1.25 toward our ultimate peak of cycle estimate of $1.85.