Barclays analyst Blayne Curtis lowered his rating on Intel to Equal Weight from Overweight, and lowered the firm’s price target to $53 from $62, or a roughly 7% upside from Friday’s close. Curtis said Intel needs to prove it can produce a generation of chips that can outperform AMD’s chips.
“We see risk of moderation in PC/server end markets, which have already outperformed, while the storyline is hampered by much uncertainty remaining around competition, process nodes/roadmaps, as well as the new CEO," analyst Curtis said in a note, according to CNBC. "Intel continues to believe that it can retain a performance advantage even with a process node disadvantage, but has provided little evidence to support this, creating an overhang well into 2019."
Intel stock was down 1.7% in pre-market trade Monday following the report. Intel shares are up 36% the past 52 weeks, but down 5% the past three months.
Market for Microchips
Intel reported better-than-expected earnings last month, with revenue increasing about 7.5%. Still, the stock plunged on the results with investors concerned about the delay of a new chip. (See also: Intel’s Lead is Disappearing.)
Intel’s competitor AMD is planning to release a 7-nanometer chip later this year. Smaller chips create faster and more powerful technology. In comparison, Microsoft said last month it will launch a larger 10-nanometer chip by next year.
"The entire competitive argument has been reduced to a comparison of process nodes and the burden is on Intel to change this storyline, which they have not to date," Curtis said in the note.