Intel shares fell after analyst warned of ‘significantly depressed’ cash flow

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The Intel logo is displayed outside the Intel headquarters

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was downgraded by analysts at BMO Capital Partners who said they “don’t see a scenario in which stocks outperform.”

BMO downgraded its rating on shares of the semiconductor maker to Market Perform from Outperform, and the target price to $ 52 from $ 60.

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(ticker: INTC) fell 2.3% on Tuesday to $ 48.28.

Analyst Ambrish Srivastava said he expected Intel to “turn things around” under the leadership of new CEO Patrick Gelsinger, addressing “years of poor execution on the process technology / manufacturing front. manufacturing “that would help the company regain market share over its competitors.

Advanced micro-systems


But that changed after Intel announced higher spending in the near term, with capital spending expected to be between $ 25 billion and $ 28 billion next year alone. Sravistava has also struggled to come to terms with the company’s projected compound annual growth rate of 10-12% over the next four to five years.

Intel has grown 6% over five years and 4% over 10 years, with double-digit growth once in the past 10 years, according to BMO.

“We see the FCF significantly depressed and anticipate a long delay for earnings to recover,” Srivastava wrote in a research note Tuesday. “First, we don’t believe Intel will be able to grow its revenue at double-digit CAGR. Second, we see Intel barely able to meet its dividend commitments given the FCF decline over the next two years. “

This is Intel’s latest downgrade after the chipmaker’s third quarter results last week. The company exceeded profit estimates but failed to generate revenue.

Last week, Mizuho analyst Vijay Rakash said Intel was “losing focus” and lowered the stock to Neutral Buy and lowered its price target to $ 55 from $ 70, MarketWatch reported. .

Morgan Stanley analyst Joseph Moore demoted Intel on a par against overweight and lowered its price target to $ 55 from $ 67, citing an increase in fixed costs.

Intel reported adjusted third-quarter earnings of $ 1.71 per share and adjusted revenue of $ 18.1 billion. Analysts expected $ 1.11 a share on revenue of $ 18.2 billion, according to FactSet. Revenue for the PC-focused client computing group fell 2% year-on-year to $ 9.7 billion.

Write to Sabrina Escobar at [email protected]

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