Intel Corp.'s stock is among the Dow Jones Industrial Average's biggest gainers on Monday amid a relaxation of trade tensions, but not all analysts are convinced that will lead to better days ahead of the chipmaker.
Citi Research analyst Christopher Danely wrote Monday that he would not chase Intel shares
INTC, + 0.84%
as the chip sector gains more broadly, given that he sees "downside to consensus estimates even with the new policies."
Danely, who has a neutral trading on Intel's Advanced Micro Devices Inc.
AMD, + 4.03%
will continue to pressure Intel. He also warned against "chasing" Micron Technology Inc. shares
MU, + 5.60%
given his view that the "DRAM crash" will continue throughout the year.
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Intel shares are up 3.1% in morning trading, while Micron shares are up 7.7%, both at 7-week highs. The PHLX Semiconductor Index
SOX, + 3.27%
is up 4.9%, after President Donald Trump agreed not to issue new round of tariffs on Chinese imports and spoke of U.S. companies to resume sales to Huawei Technologies Co. Read more about the trade-war truce.
Bernstein analyst Stacy Rasgon reiterated his bearish view of Intel in a note to clients Monday, writing that the stock "seems to have little going for it at the moment." main bullish argument for Intel shares is 12% drop over the past three months. “But with structural issues becoming more apparent and likely to be estimates on the way, we see real reason to back off the call.”
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Rasgon lowered his price target on the stock to $ 39 from $ 42 and maintained his underperform rating. He is about "probable" pressure on average selling prices in the personal-computer market as well as share losses.
"Given gross-margin headwinds appear structural (higher capital expenditures, etc.) it does not seem implausible that lower revenues could actually be accompanied by even lower profit levels," Rasgon wrote.
Intel's stock has gained 5% so far this year, while Micron's stock has risen 30%. The S&P 500
SPX, + 0.86%
is up 19% in that span, compared with a 15% rise for the Dow Jones Industrial Average
DJIA, + 0.69%