The Ratings Game: Intel gets an upgrade at Bernstein: ‘The guy with the biggest umbrella usually stays the driest’

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Intel Corp. seems better positioned than peers to weather the challenges of COVID-19, according to a Bernstein analyst, and that could be reason enough to look past the company’s “structural issues.”

Bernstein’s Stacy Rasgon ended his bearish call on Intel INTC, +5.25%  Thursday, upgrading the stock to market perform from underperform in a note titled “In a rainstorm the guy with the biggest umbrella usually stays the driest.” Rasgon argued that factors like Intel’s strong balance sheet and cheaper valuation could give the stock a bit of a cushion as the novel coronavirus drives a rocky period for the market.

“We have been negative on Intel’s structural trajectory (noting manufacturing issues, share loss, and margin compression on the come) and believe these issues still exist,” he wrote. “But in the wake of COVID-19 these may not be the most important issues to focus on at the moment.”

Read: Analog Devices pulls quarterly forecast due to COVID-19

Rasgon said that the COVID-19 outbreak could crimp demand for Intel and peers but that the chip giant could withstand these disruptions better than others in the sector “given the company is replenishing channel inventories” and can afford to overship its products, in his view. He argued that analysts have already baked a weak second-half trajectory into forecasts and noted that the company could see a “near-term notebook cycle” as more employees work from home.

Nvidia Corp. NVDA, +3.71%  and Micron Technology Inc. MU, +2.82%  have both commented on the notebook “phenomenon,” Rasgon said, and hyperscale data-center spending is also proving resilient in another positive for Intel.

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The stock has lost 14% over the past month as the PHLX Semiconductor Index SOX, +3.13%  has fallen 16%. The Dow Jones Industrial Average DJIA, +2.82%  and the S&P 500 SPX, +2.79%  have each declined 21% in that span.

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