NEW YORK – Intel Corp. (INTC) shares slipped on Tuesday after Credit Suisse First Boston (search) downgraded the stock, forecasting that the computer chip maker will have difficulty outperforming the overall semiconductor sector next year.
CSFB cut its rating to "underperform" from "outperform," citing poor positioning for secular long-term industry growth and risks of excess processor capacity. It also trimmed its price target to $22 a share from $25.
Intel shares declined 41 cents, or 1.7 percent, to $23.69 in morning trading on the Nasdaq stock market.
In a research note, CSFB analyst Michael Masdea (search) said that while Intel "will likely see near-term strength given low expectations, healthy seasonal build-demand and improving inventories, we would be sellers into the strength."
He said that factors such as weak secular positioning driving slower growth and potential risks for inventory buildup suggest that Intel "will have difficulty outperforming the overall semiconductor group in 2005."
Paul Leming, a semiconductor analyst at Soleil Securities, said the CSFB downgrade appeared to be based on longer-term issues rather than concerns about results for the current quarter or other short-term factors.
"The issues that CSFB raised this morning are valid, but they are also ones that have been out there in the marketplace for several years," he said.
He said that because the analyst downgrade "was not related to specific near-term market developments, I would be surprised to see it ripple through to other names throughout the technology sector."
Intel shares have traded in a range of $19.64 to $34.60 over the past 12 months.
Get all the stories you need-to-know from the most powerful name in news delivered first thing every morning to your inbox