Trimmed INTC at 66.06-.10. Was bought at 22.04.
May like to read Barron's article below:
Intel Stock Has Rocketed. Here's Why It Might Be Time to Sell. -- Barrons.com
DOW JONES & COMPANY, INC. 1:21 PM ET 1/27/2020
Symbol Last Price Change
INTC 66.03up -2.44 (-3.56%)
QUOTES AS OF 02:57:01 PM ET 01/27/2020
After a recent earnings-driven run to a new 20-year high, it might be time to take profits in Intel(INTC) stock.
Chip giant Intel(INTC) last week posted blowout results for the December quarter, with revenue and profits well-above estimates -- and March quarter guidance likewise dramatically above Street expectations. Driving the strong results: a surge in sales for data center server processors and surprising strength in personal-computer processors.
But there are reasons to worry about what happens from here.
Northland Capital Markets analyst Gus Richard this morning reduced his rating on Intel(INTC) stock to Market Perform from Outperform, while maintaining a $70 price target, which was just above Friday's closing mark at $68.47.
"We see a number of potential positive and negative catalysts for Intel's(INTC) shares, but do not know which will come first," Richard wrote in a research note published Monday. Richard notes that heading into the quarter, he had above- consensus expectations for 2020, but that the rest of the Street has caught up with him -- and that upside and downside potential are about evenly matched.
On the one hand, Richard sees some potential good news ahead:
-- He thinks Intel(INTC) will sell or shut underperforming product lines. Richard
noted that the company already sold its mobile-phone-modem business, and
that the company's NAND flash-memory business is "another obvious
problem" that will likely be addressed next.
-- Despite competition from Advanced Micro Devices (AMD), Intel(INTC) has a
research-and-development budget that is twice that of AMD's revenues,
Richard points out. "R&D spending and acquisitions are enabling Intel(INTC) to
move where AMD ain't."
-- He thinks Intel(INTC) will see growth in AI, silicon photonics, and
communications -- in particular he thinks the company's Barefoot Networks
acquisition will given the company a high-end Ethernet switch that "will
give Broadcom (AVGO) a run for their money."
-- And he adds that Intel's(INTC) Altera unit will move production back to Taiwan
Semiconductor Manufacturing (TSM) from Intel's(INTC) own fabs, which should
make their high-end FPGAs (field programmable gate arrays) "competitive
again in 2021."
But he has a few reservations:
-- Richard notes that Intel(INTC) has been selling chips to Huawei Technologies,
which has been building inventory ahead of potential tightening U.S.
sales restrictions. "Either Huawei will complete building buffer
inventory for a transition away from U.S. chip vendors or restrictions
will tighten; in either case, demand will fall off."
-- He adds that, longer term, China is working toward replacing PCs based on
Intel(INTC) x86 designs toward RISC-based processors built domestically, though
Richard concedes that the transition could take 10 years.
-- Intel(INTC) has been capacity-constrained for almost a year; once the company
is caught up with its orders, "demand will likely drop." Richard sees
that happening in the first half.
-- The Microsoft (MSFT) Windows 10 upgrade cycle is likely to slow in the
second half, he says.
-- Richard thinks Apple (AAPL) could switch to an internally designed PC
processor for notebooks in the second half.
-- AMD will continue to gain share, "albeit at a slower pace than some would
expect."
-- Intel(INTC) is "likely overbuilding internal capacity that will likely drive
underutilization of its fabs; this could pressure gross margin more than
is currently modeled," affecting second half 2020 results.
Intel (INTC) shares are down 3.2%, to $66.27.
Write to Eric J. Savitz at eric.savitz@barrons.com
(END) Dow Jones Newswires
01-27-201321ET
Copyright (c) 2020 Dow Jones & Company, Inc.
