Bank of America Securities analyst Vivek Arya maintained a Sell rating on Intel (INTC – Research Report) today and set a price target of $19.00.
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Vivek Arya’s rating is based on a combination of factors that highlight both operational and strategic challenges facing Intel. The potential split of Intel, with companies like AVGO and TSMC reportedly interested in acquiring parts, introduces a complex situation due to multiple parties involved and extensive regulatory approvals required, especially from global regulators such as those in China. Additionally, there is a manufacturing process mismatch between Intel and TSMC, compounded by TSMC’s ongoing expansion plans in Arizona. Financial constraints are also a concern, with AVGO’s significant existing debt and Intel’s reliance on CHIPS Act funding, which requires maintaining a majority stake in manufacturing.
Intel also faces organic risks, such as a lack of an AI pipeline and heightened competition from ARM-based rivals, which are affecting its market position. Manufacturing challenges in relation to TSMC further exacerbate these risks. Moreover, potential M&A scenarios could impact different stakeholders differently, with potential benefits for U.S. fabless customers, mixed implications for AMD, and negative consequences for semiconductor capital equipment and EDA sectors due to customer consolidation. Arya’s Sell rating reflects these multifaceted concerns, along with the potential valuation pressure on the stock due to its current high trading multiples.