Dismal Forecast Has Intel Stock Falling Fast

INTC is on track for its worst day since July

Intel Corporation (NASDAQ:INTC) is the worst stock on the Dow today by far, down 8.3% to trade at $52.85, after the chipmaker cut its 2019 revenue forecast to $69 billion from $71 billion, while also reporting lower-than-expected data center sales. The dismal guidance overshadows aearnings and revenue beat, sparking concerns about a sector-wide semiconductor slowdown.

Said CEO Bob Swan, "China headwinds have increased, leading to a more cautious IT spending environment," and that they are "anticipating an incrementally more challenging NAND pricing environment." Intel also discussed its exit from the 5G smartphone market, determining there was "no clear path to profitability."

Analysts have started to chime in, with Morgan Stanley and Stifel trimming their price targets to $63 and $47, respectively. Cowen weighed in as well, noting "we fail to see easy or quick answers for new management team despite Intel's plethora of technology and capital resources." This runs true to the overall bearish analyst sentiment toward INTC; 16 of the 27 in coverage rate it a "hold" or worse.

At least some type of pullback may have been in the cards anyway, considering Intel stock's 14-day Relative Strength Index (RSI) closed last night at 75, firmly in overbought territory. In 2019, INTC had been carving out a channel of higher highs that culminated in a fresh peak of $59.59 on April 17. Now heading for a fourth straight loss, the shares are about to breach their 50-day moving average on a closing basis for the first time since late January.

In the options pits, puts have risen in popularity. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows INTC with a 10-day put/call volume ratio of 0.85. What this shows is that although calls outnumber puts on an absolute basis, the ratio ranks in the 97th percentile of its annual range, showing unusual demand for long puts over calls in recent weeks.