Piper Jaffray upgrades Intel (INTC ) to outperform from market perform.
Analyst Richard Shannon says an improved outlook due to strong gross margin ramp during 2005 and a higher absolute level during 2006, is leading to higher earnings per share than previously estimated.
He believes the stock is highly correlated to material improvement in gross margins, which seems quite certain to occur in 2005. He says the prospect of share losses moderates his enthusiasm for Intel a little, but higher expected earnings per share power and gross margin ramp far outweigh those shorter-term concerns.
Shannon raises his $1.16 2005 earnings per share estimate to $1.24, and his $1.28 2006 earnings per shar estimate to $1.45. He raises his $25 target to $29.