Intel Corporation Shares Drop; Analysts Voice Caution

John Seward
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Intel Corporation (NASDAQ: INTC) fell sharply Wednesday after analysts dug through its third-quarter data and sounded caution on the chipmaker's outlook.

Santa Clara, California- based Intel, which relies heavily on the market for personal computers, posted a 15 percent gain in shipments Tuesday, even as the larger market for PCs was flat.

"At best it's unsustainable," according to Morgan Stanley's Joseph Moore, who downgraded Intel to Underweight Wednesday.

Moore largely dismissed the company's argument that its market share gains versus Advanced Micro Devices Inc. explained the disparity.

Rather, shipment growth amid flat end demand may signal inventory build-ups that may hurt future sales, according to Moore, who cut his target to $30.

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The company's push into mobile computing appears on track with 2014 shipment forecasts slightly ahead of its earlier prediction. But the unit lost $1 billion in the third quarter.

Summit's Srini Sundararajan expects improved performance at the mobile unit next year, but no profits. Higher costs for mobile's 14-nanometer chips were a surprise, Sundararajan said, maintaining a Hold and $31 target.

But Michael McConnell maintained a Buy rating on Intel, noting that after all, its third-quarter results and outlook were higher than expected.

McConnell raised his price target on Intel to $39 from $37 and said improving demand for PCs by corporations as well as growth in large data centers will boost Intel's earnings.

Intel traded recently at $30.46 per share. down 5.2 percent.

Latest Ratings for INTC

Oct 2014

Morgan Stanley

Downgrades

Equal-weight

Underweight

Oct 2014

Pacific Crest

Maintains

Outperform

Oct 2014

Barclays

Maintains

Equal-weight

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