Intel Corp.’s dividend cut helped earn the stock an upgrade Thursday, as Morgan Stanley now sees “limited downside” for the beaten-down name. Morgan Stanley’s Joseph Moore bumped his rating on Intel’s stock up to equal weight from underweight Thursday, writing that while Intel’s
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+0.05%
move to slash the dividend may lead to “some incremental selling in the coming weeks” due to the thresholds that some income funds may have, the decision gets a “negative catalyst out of the way.”
Moore also cited the stock’s “material underperformance” so far this year. Shares are off 3% to start 2023, while the PHLX Semiconductor Index
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+1.70%
is up 16%. See more: Intel cuts dividend by 66% in ‘inevitable’ move that was once ‘unthinkable’ In Moore’s view, Intel’s prior dividend yield of about 6% “kept dividend investors involved unsustainably,” whereas the new yield of about 2% “is both more in-line with the peer group and more supportive of the company’s multi-year capital-spending strategy” as the company plans hefty foundry spending going forward. “We have long said that we would prefer to see Intel as a value stock with optionality for a turnaround in the core business, but that the ramp of fixed costs created too much risk for cash-flow degradation,” Moore wrote. The company’s plans to cut the dividend and other costs signal “a management team that is now working to return to a more disciplined approach with regards to capital management and allocation.” Moore added that he expects Intel’s business to come under addition …