BofA Securities Downgrades Intel (INTC) to Underperform, 'Too far, too fast, fundamentals still challenged'

BofA Securities analyst Vivek Arya downgraded Intel (NASDAQ: INTC) from Neutral to Underperform with a price target of $34.00.

The analyst comments "We downgrade INTC to Underperform from Neutral while maintaining ests. and $34 PO. In our view the recent $80bn jump in INTC’s market cap more than reflects its improved balance sheet and (external) foundry potential. Meanwhile INTC’s competitive outlook remains challenged with no discernible AI portfolio/strategy, uncompetitive server CPU, and less flexibility now vs. before in divesting loss-making manufacturing, in our view. We fundamentally disagree with valuation methods that rely on sum-of-parts with PE applied to INTC Products and P/S to INTC’s loss-making “Foundry”. The term “foundry” is a misnomer since it implies great future potential to attract external customers which is unjustified. INTC relies on TSMC for ~30% of its manufacturing, with uncertainty about cost/yield of its upcoming 18A process, and future 14A process. Second, we believe US gov’t intervention requires INTC to remain committed to manufacturing, regardless of its profitability. All-in, we believe INTC valuation should be done on PE or EBITDA on earnings generated by the entire company since there is no catalyst to split."

For an analyst ratings summary and ratings history on Intel click here. For more ratings news on Intel click here.

Shares of Intel closed at $36.37 yesterday.

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