Intel Downgraded At UBS, Price Target Cut (INTC)

UBS Investment Research is cutting its price target on shares of Intel INTC to $19.50, and downgrading shares to Neutral on weaker than expected PC demand. In the report, UBS writes, "We expect Intel to become more price aggressive to achieve its low-double-digit 2011-13 sales growth goal, and we lower our 2011 gross margin est. by 400 bps. Although the recent share price correction already reflects expected earnings cuts, we believe it is unlikely to outperform with likely downward earnings revisions." UBS goes on to say, "Based on our meetings with PC supply chain companies in Asia last week, we believe: 1) near-term PC demand is weak with limited visibility, while the outlook for 4Q remains cautious, 2) to stimulate 4Q demand, Intel’s customers expect at least a 15% price reduction for mainstream processors on top of the ~50% cut to the high-end (limited volume) Core i7 prices already implemented by Intel, 3) Intel will see pressure on its gross margin, a key driver of its shares. We downgrade to a Neutral rating and lower our 12-month price target to $19.50 from $28." Shares of Intel closed down today, losing 31 cents to finish trading at $18.12.