Goldman Suchs downgraded Intel to Sell on May 19, 2011.
Goldman Sachs downgraded Intel from Neutral to Sell, citing valuation and looming excess supply. The firm cut their price target from $21 to $20.
Goldman said the 22% month over month increase in the stock is unjustified. Goldman sees a number of issues including: processor shipments slowing over the course of the year.
Street 2012 EPS reductions as record 2011 capex impacts ASPs and COGS; and increased competition from ARM based processors in tablets and eventually in mainstream PCs.
Well, let's see what happened.
For one, in the following 12 months, Intel rose to over $29 a share.
Processor shipments grew to record numbers over the course of the year for 2011.
ASPs did not get impacted at all, since Intel held processor prices strong due to superior performance and demand over its closest competitor AMD.
As for ARM based processors, Intel has already made inroads into the tablet market and is even making some serious advancements into getting in smartphones which are mostly dominated by ARM for years. And there is hardly any sign of ARM based processors in mainstream PCs.
Could be they need more cheap shares badly. Many mutual funds have it in their bylaws that they must liquidate shares in a company when they are downgraded to sell. This is why analysts never had sell warnings until a few years ago and were forced to use them after 2008. They have now found it extremely useful for closing short positions when many shars are needed and a way to establish large positoins at the bottom.Since many mutual funds haven't updated their bylaws, they continue to fall prey to this manipulation and the little guy pays.