UPDATE: Morgan Stanley Downgrades Intel (INTC) to Underweight

(Updated - March 3, 2022 4:40 AM EST)

Morgan Stanley analyst Joseph Moore downgraded Intel (NASDAQ: INTC) from Equalweight to Underweight with a price target of $47.00 (from $55.00).

The analyst comments "We downgrade INTC from EW to UW. We like new CEO Pat Gelsinger and believe in the longer term turnaround capability in the core business, but even with that view, the next couple of years are likely to see the stock move sideways and we see more actionable opportunities elsewhere in our coverage. We do not see a clear positive event path for Intel at this time. The aggressive investment in capacity in pursuit of revenue growth opportunities in foundry and graphics point to minimal free cash flow in the next couple of years - as guided, to be clear - but also drive a substantial increase in the underlying components of cost of sales (depreciation, labor, and overhead seem likely to rise 40%+ in the forecast horizon, in contrast to sales growth that's forecasted to be negative this year and low single digits next year). While we would like to see Intel as a value stock, with optionality from a turnaround in the core business, the reality is that ramp of fixed costs create a more "all-or-nothing" situation where the company is going to need to succeed in these new businesses - and still turn around their core business - or be looking at long term gross margin and cash flow degradation."

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 $48.87 yesterday.

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