Intel Corp. (NASDAQ:INTC) shares are trading down about 1.7% in very earlybird trading this Friday. The bulge bracket brokerage firm Merrill Lynch has downgraded the processor giant shares from a "Buy" rating down to the beloved "Neutral." First and foremost, this downgrade looks like a transition in coverage inside the brokerage firm. It says it expects Intel to benefit from a healthy PC demand, but notes that at 18-times CY2008 EPS that it is at the high-end of its recent valuation range.
American Express (NYSE:AXP) was also downgraded at Merrill Lynch from a "Buy" rating to a "Neutral." 2008 EPS were cut to $3.85 from $3.96 and even 2009 cut to $4.20 from $4.33.
Ironically, this downgrade that includes American Express is having a share indication impact on Merrill Lynch’s own share price. There have not been trades yet that crossed the tape pre-market, but indications have the stock around $74.00 to $74.60, versus the $75.14 close yesterday.
Sometimes butchers do cut their fingers off if they take too wide of a cut.
Jon C. Ogg
September 14, 2007
Jon Ogg can be reached at email@example.com; he produces the 24/7 Wall St. Special Situation Investing Newsletter and he does not own securities in the companies he covers.