FBR Capital Markets Thursday said it was maintaining its ''Market Perform'' rating and price target on chip maker Intel Corp. (INTC). The brokerage said it forecasts that fourth-quarter PC builds would decline -1.5% from the last quarter. The recent checks into fourth-quarter PC builds with top five notebook ODMs and top four desktop motherboard makers were worse than its checks a month ago, which projected a 5% quarter over quarter increase in the fourth quarter, FBR stated.
Analyst Craig Berger said in a research note that his contacts now expect notebook builds in the fourth quarter to grow 9% from the previous quarter, compared to the month-ago checks of a 11.5% increase. Desktop builds are now projected to decrease 16.5% sequentially, compared with month-ago checks of a 4.5% drop.
FBR said the negative revision to 4Q motherboard builds stems from lower-than-expected October shipments, some component shortages, and a possible 3Q build-ahead. The slight negative revision to 4Q notebook builds is due to lower-than-expected demand for consumer ultra-low-voltage models, the brokerage added.
''Given the heightened risk that 4Q PC chip shipments may be less than seasonal, investors should focus on enterprise and communications-exposed chip firms for 2010,'' FBR noted. Preferred value stocks include Fairchild Semiconductor International (FCS), Microsemi Corp. (MSCC) and Texas Instruments Inc. (TXN). Preferred growth stocks include Marvell Technology Group Ltd. (MRVL) and Silicon Laboratories (SLAB).
The brokerage said it is leaving its Intel 4Q financial estimates unchanged for now, ''but we note a negative bias to our estimates and will wait until we conduct our next round of checks one month from now before potentially cutting estimates.'' FBR thinks Intel is tracking to grow revenues by 4%-8% sequentially in 4Q, about in line with the firm's revenue guidance midpoint.
The brokerage decided to maintain its "Market Perform" rating on the stock until it gets better visibility into 4Q PC sell-through trends. FBR also maintained its 2010 GAAP EPS estimate of $1.65 and $27 price target.
INTC is currently trading at $19.06, down $1.06 or 5.27%, on 56.79 million shares.
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