Citi bets Intel stock rises after report: it's a popular stock to short

Analysts at Citi Research have warned of a possible short-squeeze in Intel shares - that is, the need to close short positions due to a sharp rise in price - amid a high proportion of short positions and the bank's expected strong second-quarter results. The chipmaker plans to release its results next week, and Citi estimates they will beat Wall Street's forecasts.

"Intel remains the most popular short position among investors we met with," said analysts at Citi, whose report reports Barron's. As of the end of June, short positions accounted for 2.97% of the chipmaker's free float. While the figure itself is low, it beats the performance of other semiconductor companies such as Micron Technology (2.52%) and Texas Instruments (1.95%).

Citi analysts believe Intel's stock could play a trick on shorts, as they believe its quotes could rise sharply due to short-squeeze when the report is released, the investment bank said in a note.

At trading on Friday, July 18, the company's securities strengthened by 1.3% to $23.1. Over the last five trading sessions, its shares have lost 1.4% of their value, while since the beginning of the year they are up 15%.

Investment bank predicts that Intel's profit for the second quarter will exceed Wall Street's expectations when the company publishes its report on July 24. Analysts believe that the results will be better than forecasts due to lower capital and operating expenses, as well as a possible strengthening of demand in the segment of personal computers, which provides about 60% of Intel's revenue.

The release of a strong report will lead to the growth of Intel quotations, shorts will be forced to buy back shares to close their positions, which will cause even greater appreciation, the investment bank explains;

Citi is cautious about the company's prospects: on July 7, it reaffirmed a neutral assessment of Intel shares and raised its target price from $21 to $24, suggesting a small upside potential of 4% from current levels;

On July 14, JPMorgan included Intel shares on a list of stocks on which it recommends taking short positions. The company continues to go through a challenging period as it tries to close the manufacturing process gap while maintaining share in the client and server processor markets, the investment bank explained.

On the same day, UBS analyst Timothy Arcury raised his target on Intel shares from $21 to $25, keeping his rating neutral. He, too, expects a strong second-quarter report and a strengthening of Intel's position in the contract chip business, despite continued downside risks to revenue in the client device segment.

In total, according to data from MarketWatch, Intel stock has 37 neutral analyst ratings out of 44. Five analysts advise selling the chipmaker's stock, while two advise buying. The Wall Street consensus price target, meanwhile, is 6% lower than the current one. 

This article was AI-translated and verified by a human editor