4 Reasons To Sell Intel's Stock, According To BofA

Intel Corporation’s INTC current strategy leads to lower gross margins and free cash flows over time, according to BofA Securities.

The Intel Analyst: Vivek Arya maintained an Underperform rating for Intel, with the price target unchanged at $52.

The Intel Thesis: The company’s 2021 free cash flows are estimated to decline by 48 percent, despite this being one of the strongest growth years for the semiconductor industry, Arya said in the note to clients.

The analyst mentioned 4 structural headwinds for Intel:

• Large dependence on the mature personal computer (PC) market
• Limited opportunity to gain share in the core PC and server CPU markets
• Intel’s competitors are more agile and focused design and manufacturing companies
• Foundry distraction, which offset Intel’s two major strategic assets: US-based manufacturing and large enterprise and government incumbency.

“In our view the stock is unlikely to work until this imbalance is addressed,” Arya wrote. He expects 2022 to be even worse for Intel’s free cash flow generation.

INTC Price Action: Shares of Intel had declined by 0.66% to $53.83 at the time of publication Friday.

Photo: Weldon Kircsch courtesy of Intel