Intel has less to offer investors than its semiconductor rivals.
SANTA CLARA, Calif. (TheStreet) -- Intel(:INTC), which reports fourth-quarter results Thursday, may have less to offer investors than semiconductor rivals such as Texas Instruments(:TXN), according to JPMorgan.
In a note released on Tuesday, JPMorgan analyst Christopher Danely downgraded the tech bellwether from "overweight" to "neutral," citing the firm's peaking margins, and advised investors to look to other component makers for upside.
"We prefer Texas Instruments, Analog Devices(:ADI), Xilinx(:XLNX) and ON Semiconductor(:ONNN) as all have margin and EPS upside above the universe average."
Danely was also unmoved by Intel's recent attempts to tap into the booming smartphone and tablet markets. "Although Intel is making inroads into tablet and smartphones, we do not expect it to have a material impact on its earnings," he said. "We believe Intel is at a disadvantage to ARM(:ARMH)-based chips in three key metrics of mobile computing: power, cost and software."
Intel lowered its fourth-quarter revenue forecast last month, dragging down other semi stocks. Intel blamed its lower view on hard disk drive shortages following the recent floods in Thailand. Shortages, it added, are expected to continue into the first quarter.
The chipmaker, however, said PC sales are expected to be up sequentially in the fourth quarter.
Citigroup analyst Glen Yeung warns that a cloud will likely hang over much of the semiconductor sector this earnings season. "Given negative pre-announcements from several industry bellwethers (Texas Instruments, Intel, Altera(:ALTR), Xilinx), we expect fourth-quarter results to be fraught with revenue/EPS shortfalls," he said in a note released Tuesday. "Given the weakness that marked the end of the fourth quarter, we expect chipmakers to guide the first quarter of 2012 conservatively."
Intel shares rose 15 cents, or 0.61%, to $25.29 on Tuesday.
--Written by James Rogers in New York.
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