Sinking Intel Stock Hit With Downgrade

Intel forecast modest profit growth over the next three years

Managing Editor
May 9, 2019 at 9:49 AM
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Intel Corporation (NASDAQ:INTC) had an analyst day to forget yesterday, after the chip name forecast modest profit growth over the next three years. The gloomy forecast comes less than two weeks after INTC gapped lower after the company cut its 2019 revenue forecast to $69 billion from $71 billion.

This has been followed by a downgrade to "market perform" from "outperform" at BMO, which also trimmed its price target to $50 from $68. The analyst in coverage expressed concern about the threat of rival Advanced Micro Devices (AMD), and commented that "lowering gross margin to a range of 57% to 60% leaves us with a discordant note"

At last check, Intel stock was down 4.9%% to trade at $46.98. on track for its fourth straight loss. Since peaking at a 19-year high of $59.59 on April 17, INTC has now given back 20%, and last night breached its 200-day moving average on a closing basis for the first time since early February. Now, the equity's year-to-date breakeven lead has disappeared.

Short sellers have been heading for the hills, though. Short interest fell by 8.7% in the two most recent reporting periods to 52.10 million shares, the lowest amount since January 2011. This accounts for a meager 1.2% of INTC's total available float, and 3.5 times the average daily trading volume. 

Options traders have been targeting calls. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the security with a 10-day call/put volume ratio of 2.65. This shows that not only have long calls outnumbered puts by a nearly three-to-one ratio, but the ratio ranks in the elevated 65th percentile of its annual range, showing unusual demand for long puts over calls in recent weeks.

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