Intel Corp (INTC)

[VeeCee]

Samad,
The reason is over capacity if Intel does not sell what it can produce. It is poor utilization of factories which brings margin down.
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In keeping with their negative view of the stock, analysts at Goldman Sachs maintained a Sell rating on Intel (Nasdaq: INTC) and lowered their price target to $16.00 (from $20.00). The problem, in the view of Goldman, is margins.
"We expect excess supply as Intel and AMD (NYSE: AMD) have record inventory," warned analyst James Covello. "Our hardware team expects the PC unit CAGR to be zero from 2011-2014E, and we believe the full extent of Intel's new capacity has yet to come online,"
Corvello noted that Intel stock is highly correlated to gross margin, which could take a hit as supply builds.
"Intel's 3Q12 capex was its second highest ever, suggesting that significant supply will come online for several more quarters and exacerbate current excess capacity," added Covello.
For the record, Covello's Sell rating on Intel is based on cyclical concerns. In other words, it is not a call related to the so-called 'death of the PC'.
Goldman lowered Intel's 2013/2014 EPS estimates to $1.60/$1.90 from $1.70/$2.05.
For an analyst ratings summary and ratings history on Intel (Nasdaq: INTC) click here. For more ratings news on Intel click here.
Shares of Intel closed at $20.09 yesterday, with a 52 week range of $19.23-$29.27.