Goldman Sachs recalibrated its coverage of the semiconductor sector in a wide-ranging note Tuesday that saw multiple downgrades, but chip companies Intel (INTC) - Get Report and Xilinx (XLNX) - Get Report received upgrades.
Xilinx was upgraded to buy from neutral while Intel was upgraded to neutral from sell. Texas Instruments (TXN) - Get Report , meanwhile, was downgraded to sell from neutral and Cabot Microelectronics (CCMP) - Get Report was downgraded to neutral from buy.
For Xilinx, Goldman said the company's fundamentals in the communications business are at or near bottom levels, the data center is a secular growth business and the company is disproportionately exposed to the aerospace and defense. But all these factors could quickly turn into tailwinds for the company.
Intel's price target was lowered to $54 from $55 but Goldman said it was "maintaining our estimates as we believe there are multiple near-term positive developments (i.e. potential strength/resilience in the high=end client CPU and server CPU markets given a growing number of people working/studying from home)."
There are structural challenges ahead for Intel, however, that remain unchanged, including questions about its ability to execute on its technology roadmap and stabilize its market share position.
Coronavirus is also causing a capital crunch at a time when Intel says that its capital expenditures will remain high and competition remains strong in the sector.
Xilinx shares rose 5.7% to $76.11 in trading Tuesday, while Intel gained 7.3% to $53.20.