Intel Corp. may have gotten a callout in President Joe Biden’s State of the Union address earlier in the week, but on Thursday it fell further down Morgan Stanley’s list of chip names.
Morgan Stanley’s Joseph Moore downgraded Intel’s stock INTC,
See also: Biden touts importance of U.S. chip manufacturing
“Downgrades of value stocks such as Intel and Qorvo QRVO,
Intel shares were off 2.4% in Thursday morning trading. Meanwhile, the PHLX Semiconductor Index SOX,
While Moore likes Intel’s new chief executive Pat Gelsinger and sees promise in the company’s longer-term opportunity to turn around its core business, he expects that Intel’s stock “will move sideways” over the next few years.
“While we would like to see Intel as a value stock, with optionality from a turnaround in the core business, the reality is that ramp of fixed costs creates a more ‘all-or-nothing’ situation where the company is going to need to succeed in these new businesses—and still turn around their core business—or be looking at long-term gross margin and cash-flow degradation,” he wrote.
Moore cut his price target on Intel shares to $47 from $55.
Opinion: Intel’s Gelsinger lays out turnaround plan, and investors are in for a long haul
He also downgraded shares of Qorvo Inc. and Teradyne Inc. TER,
On Qorvo, he sees a “significant chance of an inventory correction” around the second and third quarters, which makes the Morgan Stanley team “tactically a bit more cautious.”
As for Teradyne, Moore sees room for a “significant recovery” in the company’s Apple Inc. AAPL,
Qorvo’s stock is off 3.7% Thursday, while Teradyne’s stock is down 3.9%.
More positively, he upgraded shares of GlobalFoundries Inc. GFS,
