Now is the time to offload shares of Intel , according to Susquehanna. The firm downgraded Intel shares to negative from neutral in a note on Friday. It also slashed its price target to $40 from $50, roughly in-line with where the stock closed Thursday. The new rating comes after Intel reported earnings on Thursday that didn’t live up to Wall Street’s expectations, sending shares down more than 11% early Friday. Susquehanna especially called out Intel’s results in its data center and artificial intelligence arm – revenue for the section in the last quarter only reached $4.6 billion, much worse than analyst expectations of $6.2 billion. “While we had previewed PC headwinds, the shortfall in Data Center revenue was perhaps the most surprising,” analyst Christopher Rolland wrote in. Intel also gave a worse third-quarter revenue guidance than analysts were expecting, pointing to more pressure ahead. Overall, Susquehanna doesn’t see Intel as stacking up against competition from other computing peers that appear stronger, such as Advanced Micro Devices and Amazon’s AWS. “Ultimately, we believe the market values companies on discounted free cash flow and unless something changes strategically, we expect FCF to remain significantly depressed for at least the next few years (even with CHIPS Act subsidies),” Rolland wrote. “For decades, Intel was able to cover up a litany of failed projects, poor acquisitions, and strategic foibles by pushing Moore’s Law and process leadership,” he continued. “Unless they regain this leadership (we think unlikely), or change strategic direction, we expect growth, profitability and cash flow problems to persist at Intel.”
© heardonwallstreet.com