One analyst is using this Intel pop to take profits

Published Fri, Jan 24 20207:51 AM ESTUpdated Fri, Jan 24 20204:00 PM EST

Sell the pop in Intel shares because the chipmaker faces a challenging year, according to Loop Capital Markets. The firm downgraded shares of Intel to sell from hold following the semiconductor stock's jump on better-than-expected earnings. "Intel will likely see growing challenges through 2020," Loop's Cody Acree said in a note to clients Friday. Shares of Intel soared more than 8% on Friday following its beat on the top and bottom lines of its fourth-quarter earnings after the bell Thursday. The chipmaker reported earnings of $1.52 per on revenue of $20.21 billion, while analysts were expecting earnings of $1.25 per share on revenue of $19.23 billion, according to Refinitiv. The strong report pushed Intel's stock to its highest since the dot-com bubble in 2000. For Intel's 2020 fiscal year, the company expects $73.5 billion in revenue, which would be up 2% annually. This forecast is about $1 billion ahead of Loop's estimates and consensus. These estimates likely won't hold up well when compared with Intel's strong 2019, Acree added. "We expect the annual compares to deteriorate quickly, with mid-single digit growth in 2Q followed by mid-single digit declines in the second half," said Acree. "The PC business is expected to decline low-single digits and Data Center growth is expected to slow to the high-single digits." Acree also said the computer industry migration to Windows 10, a trend Intel has benefited from, will be "largely played out by the end of 1Q." Plus, semiconductor stock AMD has about 20% market share of the chip industry due to Intel's constraints on manufacturing. "AMD is also taking advantage of Intel's shortages to be more aggressive on price, which should be a growing headwind for Intel as the year progresses," said Acree. "We believe competition from AMD is likely to be a bigger factor in the mix through 2020 and beyond." Despite the downgrade, Loop raised its price target to $59 per share from $50, driven by higher estimate revisions. This price is lower than Intel's closing price of $63.32 per share on Thursday. —with reporting from CNBC's Michael Bloom.

Intel

Justin Sullivan | Getty Images

Sell the pop in Intel shares because the chipmaker faces a challenging year, according to Loop Capital Markets.

The firm downgraded shares of Intel to sell from hold following the semiconductor stock's jump on better-than-expected earnings.

"Intel will likely see growing challenges through 2020," Loop's Cody Acree said in a note to clients Friday.