The shares of Intel (INTC) are declining in a market that is broadly higher after research firm Bernstein downgraded the stock to Underperform, its equivalent of a sell rating, from Market Perform. The chip maker is facing "structural headwinds" that could cause its stock to drop significantly over the long-term, the firm warned.

NEGATIVE CATALYSTS: Intel's best business, its datacenter unit, "is beginning to crack," warned Bernstein analyst Stacy Rasgon. Specifically, Intel has lowered its targets for the business, while the unit's margins are dropping amid increases in competition and increased dependence on less attractive activities, Rasgon warned. Meanwhile, as PC demand declines, Intel needs to expand to new areas in order to utilize its manufacturing scale, but the growth outlook of these new activities is less appealing than that of the company's current businesses, Rasgon stated. Finally, Intel's competitors are effectively using advances in design and architecture to develop products that are more efficient than Intel's offerings, the analyst stated. Calling Intel's stock "expensive," Rasgon says that the stock's valuation is roughly 10% below record levels, despite the company's deteriorating fundamentals and near-record capital spending. He placed a $30 price target on the name.

OTHER RECENT INTEL TAKES: About a week ago, MKM analyst Ruben Roy assumed coverage of Intel with a $42 price target and a Buy rating, arguing that the decelerating decline of the PC market is enabling the company to increase its investments in growth drivers. He believes that investments and initiatives that the company is undertaking should cause the revenue growth of its data center business to accelerate while increasing the unit's competitive advantages. He set a $42 price target on the stock. However, Rosenblatt analyst Hans Mosesmann is more in line with Bernstein's Rasgon, as he started coverage of Intel with a Sell rating, arguing that Intel's server chips will probably lose market share as data demand rapidly intensifies, since Intel's chips will not be able to handle the demand increases. Meanwhile, the company's newer businesses in the datacenter space are riskier, and their proprietary nature makes them less than ideal, Mosesmann warned, adding that Intel's manufacturing advantages have eroded.

PRICE ACTION: In early trading, Intel lost 1.5% to $35.67 per share.