Intel’s stock had worst day in more than 3 years Intel

Intel Data-center market weakness is being influential

Intel Corp.’s stock plummeted and closed for its worst day in more than three years Friday after the chip giant cut its outlook for the quarter and year to “cautious” levels late Thursday, Marketwatch reports. Intel INTC, -8.99% shares had dropped nearly 11% Friday, threatening the stock’s worst one-day drop in more than a decade, but pared losses to narrowly avoid that fate, closing down 9% at $52.43, for its worst one-day percentage drop since Jan. 15, 2016, when the stock closed down 9.1%, according to FactSet data.

Cowen analyst Matthew Ramsay, who has a market perform rating and a $50 price target, said the most notable change over a quarter was “the tempered datacenter expectations” with Intel’s data-center outlook swinging from a mid-single digit gain in 2019 to a mid-single digit loss, or a full 10 percentage points down from January.

Jefferies analyst Mark Lipacis, who has an underperform rating and a $40 price target, said to expect more cuts, with the view that Intel’s problems are company specific rather than industrywide, and that Advanced Micro Devices Inc. AMD, +0.80% will be there to pick up market share. AMD shares were up 0.1% Friday.

“Importantly, INTC forecasts its [data-center group] revs to decline by mid-single digits in 2019,” Lipacis said. “Our field checks indicate AMD share gains ramp in 3Q, and we expect further cuts to INTC consensus estimates to follow shortly after.”

MKM Partners analyst Ruben Roy, who has a buy rating and a $58 price target, said he believes the bull-case for Intel remains intact long term.

“While the near-term challenges, particularly for the [data-center group] are disappointing, we continue to believe INTC’s diversification toward data centric businesses and continued focus on increasing operational efficiencies will ultimately position the company toward faster longer-term revenue growth at stronger profitability margins,” Roy said.

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Mohsen Daemi
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