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BofA Cuts Intel Target On Uncertain Roadmap

BofA Cuts Intel Target On Uncertain Roadmap

Optimism around Intel Corporation (NASDAQ: INTC) is offset by continuing manufacturing headwinds that could lead to loss of market share, according to BofA Securities.

The Intel Analyst: Vivek Arya maintained a Neutral rating for Intel, while lowering the price target from $62 to $55.

The Intel Thesis: While Intel has exposure to multiple positive trends, including cloud, artificial intelligence, 5G, autonomous cars and internet of things, the stock is likely to remain range-bound until its operating model is sorted out, Arya said.

There are two extreme views of Intel: either that it continues to face manufacturing problems that could cost it 40%-50% of its market share or it separates cleanly into a fabless entity, both of which "could prove incorrect."

Arya added that Intel faces unique challenges in outsourcing everything to third party foundries. The company may need to choose a middle path, where its 10-nanometer pipeline and data center and PC market position provides it a cushion through at least 2021.

Arya pointed out, however, that the indecision around manufacturing for 2022 and beyond may prompt customers to shift to Advanced Micro Devices, Inc. (NASDAQ: AMD).

INTC Price Action: Shares of Intel were trading around $49.24 at the time of publication.

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