Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: puborectalis who wrote (75004)	3/1/1999 8:21:00 PM
From: puborectalis	Respond to of 186894

INTEL (INTC) 119 15/16. A downgrade here today could pull the whole tech sector lower. On Friday, a downgrade to Micron Technology (MU) by Goldman Sachs caused that stock to fall 8 13/16, and the SOX semiconductor stock index plunged 33.35 points. A repeat today is possible. Before the open, DLJ downgraded Intel (INTC) from "buy" to "market perform." DLJ also lowered the 12-month price target to $160 from $175, and lowered earnings estimates for this year and next by 15 cents. INTC is almost certain to take a hit today, even after the stock fell 7 13/16 on Friday. This illustrates the problems a stock can have after all the good news is in the price. The consensus Wall Street rating on INTC is a "strong buy." Earnings estimates are for fantastic growth. When a stock is getting upgrades and riding momentum from upward earnings revisions, the stock flies. But after a while, all that news gets in a stock price. Then, it doesn't even necessarily take specific bad news to take the stock down a bit. All that has to happen is that a broker says, "Hey, valuations are high, and earnings growth won't quite be what was expected." Then, the only rating changes that occur are going to be downgrades, because everyone has the stock at the top of the list already. That is what has happened to INTC today and Micron on Friday. DLJ has made a significant earnings cut for 1999 for INTC from $4.65 to $4.50 per share. This is important because it is a break from the pack. The consensus estimate is currently $4.70 per share. It makes a noteworthy statement, and such a move often is followed by similar moves by other firms. INTC is not in any serious trouble, of course. In 1998, the company earned $3.54 per share. So, $4.50 per share this year would represent excellent growth. It is just that the optimism had perhaps gotten a bit carried away, at least according to DLJ. INTC currently trades at 34 times trailing earnings, and with strong growth projected for next year, that is not unreasonable. It is just that when a stock gets put so high on a pedestal, almost anything can knock it off, or at least bring it down a rung or two. That is what INTC faces today. Chart