UPDATE: Morgan Stanley Reiterates Underweight Rating, Lowers PT on Intel Corporation

In a report published Monday, Morgan Stanley reiterated its Underweight rating on Intel Corporation INTC, but lowered its price target from $26.00 to $24.00. Morgan Stanley noted, “Our concern has been that management has been too bullish on PC demand (which is playing out) and that there is margin erosion as new capacity comes on line (which is still ahead). We project average selling prices stop going up, fixed costs rise, and unit growth remains slow next year. We see GMs are declining from 63% this year to 58.5% in 2014. Fixed costs likely rise 10%+ 2013-14 driven by high capital spending in 2011-13. There are positive aspects to the story. Supply chain discussions likely indicate Intel can defend turf vs. Windows on ARM in notebooks with little disruption. Data center should continue to grow both units and ASPs. Dividend yield of 3.7% likely protects downside, despite a relatively low free cash flow yield.” Intel Corporation closed on Friday at $24.19.