Intel Cuts Guidance And Wall Street Cuts Price Targets

Intel Corporation INTC on Thursday reduced its Q1 revenue estimates by nearly $1 billion. Analysts were quick to weigh in on this unexpected adjustment.

Ascendiant, one of the few firms not satisfied with Intel's performance up until this point, reiterated its Sell rating, as well as its $24 price target.

"Because of Intel's dominant market share in enterprise computing, the company enjoyed an outsized benefit in 2014 from the temporary strength, but conversely is now likely paying an outsized penalty," Ascendiant wrote in a note. "AMD has been struggling to gain share in the enterprise market and lessen its consumer exposure. Therefore, today's sympathetic sell-off in AMD may be a short-term trading opportunity as we do not expect it to follow suit with a negative pre-announcement."

Most other researchers lowered price targets while remaining somewhat positive.

Canaccord lowered its PT from $40 to $38 but upgraded the stock to Buy, noting the increased confidence in its forward estimates "versus market expectations, a compelling dividend yield, and 23% upside to our PT."

Imperial Capital maintained its Outperform rating but lowered its PT from $40 to $35.

Pacific Crest lowered its PT from $42 to $35. In a separate note, Pacific Crest said this hurts Microsoft Corporation MSFT and lowered the Windows maker's PT from $58 to $48.

Morgan Stanley maintained its Underweight rating and $30 PT.

MKM Partners lowered its PT from $45 to $40, Jefferies lowered its PT from $50 to $48 and Deutsche Bank lowered its PT from $42 to $38. All three firms reiterated their Buy ratings.

Citi is still neutral but dropped the PT to $31 (from $34).

BMO Capital Markets reduced its PT from $45 to $40 but reiterated its Outperform rating.

"Silver linings in the negative pre-announcement? Well, Intel kept its GM target intact for the current quarter, at 60%, and the DCG business appears to be on track," BMO wrote in a note. "We believe PC-related units for Intel in 1Q were lower by about 9 million units. Sources of weakness included a quicker fading tail from the XP refresh affecting the SMB market and the impact of weaker currency on PC sales across Europe, particularly in Russia."

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.