Why This Intel Analyst Is No Longer Bearish: 'Paying A Dividend ... Is Counterproductive'

Shares of Intel Corporation INTC recovered lightly on Thursday morning, putting a temporary pause to its losing streak.

Although investors have punished the stock for dividend cuts, it was the right thing to do, according to Morgan Stanley.

The Intel Analyst: Joseph Moore upgraded Intel from Underweight to Equal-Weight while reducing the price target from $29.50 to $28.

The Intel Takeaways: The company slashed its dividend by around 60%, aiming for a dividend yield that is aligned with its industry peers, Moore said in the upgrade note.

Check out other analyst stock ratings.

“From our standpoint, paying a dividend at all - even the remaining $0.50/share - is counterproductive, given an ambitious and highly capital intensive strategy to return to growth across a wide variety of businesses,” the analyst said.

“The company has plenty of borrowing capacity to fund dividend payments, but it simply runs counter to the stated objective of creating an Intel that can be one of the better industry growth stocks,” he added.

“With material underperformance YTD and in late 2022, and this negative catalyst out of the way, we see balanced risk reward,” Moore said. 

INTC Price Action: Shares of Intel were trading 1.04% to $25.74 Thursday morning. 

Photo courtesy of Intel.