Intel stock downgraded at BMO: 'We fail to see a scenario where shares outperform'

Analyst argues that revenue-growth target seems out of step with historical patterns

Intel Corp.'s challenges are well documented as the chip giant looks to recover from a series of technological missteps while also investing in a foundry business, but one analyst has fresh concerns about the company's prospects.

BMO Capital Markets' Ambrish Srivastava downgraded Intel shares $(INTC)$ to market perform from outperform Tuesday, arguing that the company could be too optimistic with its recovery target.

"We fail to see a scenario where shares outperform," he wrote, adding that he "took a couple of days to think this through" following Intel's earnings report last week.

See more: Intel stock sinks as earnings prompt questions about falling margins

Srivastava keyed in on Intel's expectation that it can grow revenue at a 10% to 12% compound annual growth rate over the next four to five years once supply normalizes and the company benefits from investments meant to add capacity. This seems out of line with historical performance, Srivastava said, as the company has only grown revenue at a double-digit clip once in the past 10 years.

He also argued that Intel's earnings "could be depressed for a while before we see a clearer path to recovery" and worried about the impact of Intel's free-cash-flow positioning.

"[W]e see Intel barely being able to cover its dividend commitments given the depressed FCF over the next two years," he wrote. "Intel has a lot of capacity to take on additional debt, so we are not suggesting that Intel's dividend could be at risk, but pointing out that Intel may have to access the capital markets to fund both its aggressive capital expansion plans and to continue to pay its dividend."

Srivastava lowered his price target to $52 from $60 on Intel's stock, which has declined 9.0% over the past three months as the Dow Jones Industrial Average has added 1.7%.