Goldman Sachs just issued a note urging investors to "sell" Intel Corp. shares, citing slowing processor shipments, rising competition and record capital spending this year.
Analyst James Covello, who had a "neutral" rating on the blue-chip chipmaker, also cut his price target to $20 (U.S.) from $21. He is now one of four analysts with a "sell" rating on the stock, according to Bloomberg data. There are 34 who rate it "buy" and 14 who rate it "hold." The 12-month consensus target price is $25.91.
Goldman also lowered its view on the U.S. semiconductor equipment sector to "cautious" from "neutral," citing looming excess supply on account of recent strong capital expenditure levels.
The brokerage cut its rating on KLA Tencor Corp. to "sell" from "neutral," saying the chip equipment maker has the most exposure to the foundries and Intel.
It also downgraded Applied Materials Inc to "neutral" from "buy," as it expects the world's largest maker of equipment for semiconductor manufacturing to be hurt by a forecast 20 percent decline in 2012 capex levels for the industry.
But it upgraded Lam Research Corp , which supplies tools for etching circuits on to microchips, to "buy" from "neutral," saying the company's above-average memory sales, and limited Intel exposure should allow it to outperform peers.
For further reading, here's an interesting analysis of the tech sector by the Globe's Simon Avery: