Analyst downgrades Intel, sees pricing pressure

NEW YORK -- A Bernstein Research analyst downgraded Intel Corp. on Monday, foreseeing pricing pressures for the chip maker in the next 12 to 18 months.

The analyst, Stacy Rasgon, downgraded Intel to "Underperform" from "Market Perform" and cut his target price to $20 from $24.

"Intel's phenomenal revenue growth over the last couple of years has been out-of-sync with many data points in PCs," Rasgon wrote in a note to investors. "Indeed, we find that most of Intel's growth in PC revenues was not really due to outsized unit growth, but instead from significant upside to pricing."

The analyst thinks that Intel's pricing environment, "a significant source of support over the last few years, may be under pressure over the next 12-18 months" as the company tries to simulate demand for ultrabook products. Ultrabooks are very thin, light laptops.

Rasgon also cited increasing industry competition and significant capital expense levels. He added that the downgrade is "not a call on the upcoming quarter and outlook" for Intel.

"Rather, this call is on longer term fundamental trends that we see impacting Intel over the next year which should lead to underperformance in the stock," he said.

Intel shares closed down 17 cents at $22.51 and slid 22 cents to $22.29 after hours.