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There is no doubt that analyst rating changes can have an immediate impact on the price of an individual issue. Whether or not the impact will hold true over the course of time will be determined by the price action moving forward.
On Friday, there was a rare double downgrade of Intel Corporation INTC by JPMorgan & Chase. The price action following the downgrade makes it the PreMarket Prep Stock of the Day.
Intel Makes A Comeback: Intel has been decimated this year. After ending 2021 at $51.50, it peaked in January at $56.28 and went straight down. Finally, it bottomed in mid-October with a trio of lows at the $24.65 area. Those lows coincide with its August 2015 low of $24.87.
It has participated with the broad market in the recent rally and reached its highest level since making the multiyear low when it reached $29.83 and backed off to close at $29.76.
The Ax: Before the opening Friday, JPMorgan & Chase did the dreaded double downgrade, flipping its rating from Overweight to Underweight. In addition, its price target on Intel was halved to $32.
The analyst cited increased competition from Advanced Micro Devices, Inc. AMD, delays in the delivery of new chips and slowing demand for their products.
PreMarket Prep’s Take: When the issue was being covered on the show, it was already trading in the red by over 50 cents at the $29.20 area. Both hosts of the show are long shares but had different reactions. Co-host Dennis Dick was upset by the downgrade, as Intel had been on the comeback trail.
The author of this article was skeptical of the timing of the downgrade and suggested that it may be an opportunity to “buy the dip.”
INTC Price Action: After a much lower open ($28.93 vs. $$29.76), the issue went a few cents lower and sharply reversed course. As of 1 p.m. Friday, it had eclipsed Thursday’s high and is trading above $30 for the first time since September 13.
Intel ultimately gained 2.25% Friday, closing at $30.43. The discussion on Intel from Friday’s PreMarket Prep show can be found here:
Photo courtesy of Intel.
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Image and article originally from www.benzinga.com. Read the original article here.