Intel Stock Eyes Key Trendline on China News, Downgrade

The analyst cited concern over the company's CEO search

Jun 25, 2018 at 9:13 AM
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It could be a rough day for chip stocks, following reports the Trump administration is considering banning the purchase of U.S. technology firms by companies with at least 25% Chinese ownership, as well as limiting more tech exports to China. Exacerbating these sector headwinds for Intel Corporation (NASDAQ:INTC) is a bearish brokerage note, with the Dow stock down 2.2% ahead of the bell.

Specifically, Nomura downgraded INTC stock to "neutral" from "buy." In addition to uncertainty sparked by last week's surprise departure of CEO Brian Krzanich, the analyst in coverage also expressed concern over the delayed production of the company's next-generation 10-nanometer chip.

This morning's pre-market downside just echoes the tech stock's recent technical troubles. Since topping out at a 17-year high of $57.60 on June 4, the shares have shed 8.8%, closing last week at $52.50 -- just below their 80-day moving average. Intel could put its 120-day moving average to the test today, which is currently located at $50.41, and hasn't been breached on a daily closing basis since last September.

There's certainly room for more analysts to downwardly revise their outlooks on the Dow stock. Of the 28 brokerages covering the shares, 17 maintain a "buy" or better rating. Plus, the average 12-month price target of $59.65 stands at a healthy 13.6% premium to last Friday's close.

Short sellers have been turning up the heat, too. Short interest on Intel climbed almost 10% in the two most recent reporting periods to 3.8 million shares. These bearish bets account for just 1.8% of the equity's available float, and continued shorting activity could keep pressure on INTC.

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