Wait to Bet on Intel Stock Until After Earnings

This commentary first appeared on Forbes Great Speculations, where Schaeffer’s Investment Research is a regular contributor.

Intel Corporation (NASDAQ:INTC) is preparing to report third-quarter financial results after the close today. Wall Street expects the semiconductor concern to report earnings of 32 cents per share on revenue of $15.25 billion, both of which are year-over-year decreases. Below, we will take a look at how the equity has performed on the charts recently and explore some of the options activity surrounding INTC ahead of the event.

Today, Intel stock is lower, last seen down 1.8% to trade at $26.72. The shares have contended with their 30-day moving average for much of the year. They’re currently trading above the trendline after pressure formed following a late-July bear gap on the charts. Trending lower since its April 2021 peak, INTC now sits at a 47.9% year-to-date deficit.

INTC Chart October 262022

INTC Chart October 262022

A look at the equity’s history of post-earnings reactions during the past two years shows an overwhelmingly negative response. Intel stock dropped lower the day after its last eight reports, shedding more than 5% in every instance and averaging a post-earnings drop of 8.1%. Now, the options market is pricing in a slightly higher move of 11.9%.

Short-term options traders, meanwhile, are operating with a serious call-bias. This is according to Intel stock’s Schaeffer’s put/call open interest ratio (SOIR) of 0.68, which sits in the low 6th percentile of annual readings.

On the other hand, analysts are more pessimistic. Of the 24 in coverage, just three rate INTC a “buy” or better, and the 12-month consensus target price of $34.27 is a 24.5% premium to current levels of trading.