Needham & Company analyst N. Quinn Bolton reiterated his Hold rating on Intel stock in a research note to investors on Monday. Bolton assigned the rating after taking a cautious tone on the semiconductor stock. Needham also released its Industry report titled “2014 Recap and 2015 Outlook-Turning more cautious on Semiconductor Stocks.”
Strong YTD performance from Intel
The report talks about the semiconductor industry in 2015 and the chip maker’s strong performance year to date in 2014. The company’s shares have increased 45%, compared to a 30.3% gain for the SOX index and a 15.1% gain for the NASDAQ Composite. Due to the company’s strong performance, Bolton assigned a Hold rating to the stock. The analyst also gave 2016 estimates for Intel in his report.
“Given our more cautious stance on the semiconductor industry entering 2015 and Intel’s strong performance YTD……..we maintain our Hold rating on Intel shares,” said the report.
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Recently other research analysts have also assigned ratings to the stock. Bank of America maintained Intel as its top pick in a research note to investors on Dec. 19. The analysts have assigned it a price target of $43 per share. Citigroup analysts initiated coverage of Intel shares in a research note on Dec. 18 and assigned a Neutral rating on the stock. Intel stock has been given a price target of $35 by Citigroup. Morningstar analysts have maintained their Stewardship Rating of Standard on the stock in a research note to investors on Nov. 21.
Presently Intel has an average rating of Hold and a consensus price target of $35.60 per share.
Analyst cautious on semiconductor industry
According to Bolton, the risk/reward mix for the semiconductor industry has become more balanced, as semiconductor stocks outperformed the broader markets, and industry valuation multiples have surged in the last two years. The Needham & Company report also talked about three significant issues that will come in the semiconductor industry, such as declining revenue and EPS growth. Also industry multiples expected to rise, and consensus estimates have already having taken into account vigorous earnings growth.
According to Bolton, as of now, they would prefer to hold their investments in semiconductor stocks and see whether the market sees some correction in the first half of 2015, presenting a better opportunity to buy them.