Intel Corp. (INTC) faced massive Wall Street fallout Friday after the chip giant divulged in an earnings call ( ) that its next generation of chips would be delayed and that it may seek a third-party manufacturer to make them. Bernstein analyst Stacy Rasgon downgraded Intel to underperform from market perform after what he called the worst Intel earnings call in the 45 he has covered in that it brought "the structural issues we have been talking about for years directly to the forefront." Late Thursday, Intel said it was delaying its 7-nanometer line of chips by at least six months and that it may have to resort to an unheard-of contingency plan of having a another fabricator make them. "From here we see things growing increasingly painful as 7nm delays are likely to overshadow anything good they can put forth, while magnifying any negative events, all while they fight an existential conflict with themselves as they attempt to figure a way out of the hole they have dug," Rasgon said. Deutsche Bank analyst Ross Seymore also downgraded Intel, in this case to a hold from a buy, since the delay "will foster fears of competitive pressures persisting, if not accelerating over the next 2-3 years and thereby cap the valuation on its shares." Of the 41 analysts who cover Intel, 12 have overweight or buy ratings, 20 have hold ratings, and nine have sell ratings, after three other analysts downgraded Intel, according to FactSet data. At least 16 analysts cut their price target on the stock, resulting in an average target price of $59.55, down from a previous $64.82, according to FactSet. Intel shares dropped more than 17% in early Friday trading, while shares of smaller rival Advanced Micro Devices Inc. (AMD), which already sells 7-nm chips, surged 11%. American depositary receipts of Taiwan Semiconductor Manufacturing Co. (2330.TW), which makes AMD's chips, also surged 9%.
-Wallace Witkowski; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
July 24, 2020 10:55 ET (14:55 GMT)
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