Stocks

Intel Corporation Investors May ‘Consider Lightening Positions’: Analyst

Intel will release its next earnings report next week, and it will be crucial for stakeholders. Research house BlueFin Research Partners warns investors against the company’s stock, citing production cuts in its chip output.

Intel Corporation Investors May 'Consider Lightening Positions': Analyst

PC demand not exciting

Steve Mullane of BlueFin states that “investors may want to consider lightening positions” as the firm is lowering its chip output. The analyst noted that “more negative news with the PC market” can be expected this summer, and there are good chances that the chip maker will lower its revenue guidance for the year.

Mullane notes that the firm’s production output for the second quarter and guidance for the third quarter are significantly lower than the consensus estimates. Therefore, the analyst expects the chip maker to lower its revenue guidance for the year when it report its earnings on July 15. Also the late adjustment by the chip maker to its production levels suggests more “unwanted” inventory.

Mullane expects the weak PC market to continue impacting PC suppliers, at least in the near term as Windows 10 is not expected to cause much excitement in the market. Intel’s stock already reflects the weak PC market. Also, owing to weak back-to-school demand, PC shipments could be even lower than estimates, believes Mullane. The analyst suggests that until Intel releases its Skylake processors in the third quarter, investors may be better off by “lightening” their exposure until demand for PCs “stabilizes.”

Analysts rate Intel a Hold

Many analysts have released their verdicts on Intel recently. The stock has been downgraded to Hold by BMO Capital Markets in a note released on Monday. In a research note on Thursday, analysts at Citigroup reiterated their Hold rating on the stock. Analysts at Pacific Crest, in a research note on June 30, reiterated their Buy on the chip maker. Drexel Hamilton analysts reiterated their Buy on the stock with a price target of $40 in a note on June 30. Deutsche Bank analysts, in a note on June 28, reiterated their Buy rating on the stock. Presently, Intel has a consensus rating of Hold and an average price target of $36.18.

At around 1 p.m. Eastern, Intel stock was down 1.63% at $29.55, and year to date, the stock is down by almost 20%. In the last 12 months, the stock is down by almost 5%.

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