Morgan Stanley is upgrading Intel (NASDAQ:INTC) to Equal Weight from Underweight ($24 target) this morning saying that based on INTC’s earnings report and 1Q08 outlook, they expect street estimates to move closer to their below consensus estimates, and based on aftermarket trading (down 16%) they believe that their cautious stance is getting baked-into the stock. MSCO's UW-V rating was based on concerns of double ordering of MPUs, peaking gross margins and peaking YoY revenue growth, which led them to model EPS that was $0.10 and $0.27 below consensus for 2008 and 2009 respectively. INTC traded to $19.50 in the aftermarket, which translates to a decline of 27% for 2008 YTD, below the 13% and 6% decline in the SOX and SPX.
INTC hasn’t seen signs of double ordering, and believes that the PC supply chain is healthy. MSCO remains concerned about the macro environment and supply chain inventories. They think order patterns after the lunar new-year (Feb 8) will provide visibility into these issues.
Notablecalls: Sub-$20 is too much for INTC here. I feel the stock will finish above $20 today.