Intel stock drops 6% after Needham, Susquehanna downgrades

Shares of Intel Corp. INTC, +3.80% are down nearly 6% in premarket trading Friday, after the company reported disappointing fourth-quarter earnings and gave a downbeat outlook for the current quarter and the year ahead. Needham analyst N. Quinn Bolton lowered his rating on the shares to hold from buy, writing that the company’s numbers "were below our revised expectations as cloud customers pivoted from capacity addition to inventory absorption in late 4Q18 and the slowdown in China created excess inventory in the enterprise segment." He expects these two factors to impact demand for Intel’s data-center products, the company’s largest driver of growth. Susquehanna’s Christopher Rolland downgraded the stock to neutral from positive and cut his price target to $50 from $58, citing a deceleration for the data-center group, macroeconomic concerns, and risks to the company’s process-technology leadership. He wrote that Intel’s projection for mid-single-digit data-center growth on a year-over-year basis in 2019 seems to imply an "overly aggressive" reacceleration in the second half of the year. Rolland deems that projection questionable given tough comparisons ahead, "a lack of overly compelling new server features," and potential share losses to Advanced Micro Devices Inc. AMD, +5.30% in servers. The stock has gained 12% over the past three months, as of Thursday’s close, while the Dow Jones Industrial Average DJIA, -0.09% has slipped 1.7%.

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