Why Intel Stock May Plunge 15% Further

Shares of Intel Corp. (INTC) are set to continue their descent as the chipmaker struggles with a myriad of a structural issues and faces uncertainty over the abrupt departure of its Chief Executive Officer (CEO) Brian Krzanich, according to one bearish team of analysts, as reported by CNBC. (For more, see also: Intel’s Chip Lead Is ‘Disappearing’.)

Abrupt CEO Departure 

Analysts at Bernstein were out with a downbeat note on the semiconductor manufacturer on Tuesday, cutting their price target to $42 from $54 and downgrading Intel stock to underperform from market perform. Bernstein's Stacy Rasgon expects shares to fall another near 14% from Tuesday's close, with the stock down 1.8% for the day to $48.76. While the analyst had upgraded Intel in April on stronger-than-expected second quarter earnings results, she wrote that her investment team is "regretting that upgrade," reports CNBC. 

Intel's Stock Vs. The Market in 2018

"It is becoming increasingly apparent that the structural issues we have promulgated for years are becoming ever obvious to investors," wrote Rasgon. "And now, we believe uncertainty around the CEO change provides an opening, limiting upside risk if numbers continue to move up for the time being, while these structural issues grow more visible.”

Krzanich resigned from his position last week due to his alleged infraction of the firm's nonfraternization policy, and was replaced on an interim basis by Chief Financial Officer (CFO) Robert Swan.

Analysts at Nomura Instinet were also out with a downbeat note in response to the new CEO search, writing that the expected naming of internal product manager and engineer Dr. Venkata (Murthy) M. Renduchintala as CEO will not help ease investor worries about compounding issues facing the company's long-term franchise. Like their peers at Bernstein, analysts at Nomura view an increasingly competitive environment with rivals such as Advance Micro Devices Inc. (AMD) limiting upside for Intel stock. Bernstein's note was much more pessimistic than Nomura, however, with the former forecasting earnings per share (EPS) growth deceleration into 2019 "as compares get harder and structural issues build," and with the latter forecasting shares to gain roughly 13% over 12 months. 

Intel stock is down nearly 9% over the last five days, shaving tens of billions out of the chipmaker's market capitalization, paring a 5.6% increase year-to-date (YTD) and a 44.9% gain over 12 months. Despite the drop, INTC is still sharply outperforming the broader S&P 500's 1% return and 11.6% growth over the same respective periods. (For more, see also: Intel to Suffer on ‘Lack of Leadership’.)