Intel (INTC) is retreating after research firm Bernstein cut its rating on the stock to Underperform, the firm’s equivalent of a “sell” rating. Although it now seems unlikely that the chip maker will issue a negative preannouncement about its first quarter results, it is not yet “out of the woods,” according to Bernstein analyst Stacy Rasgon.

WHAT’S NEW: Noting that a debate had swirled recently as to whether Intel would issue a negative first quarter preannouncement, Rasgon says that such a warning does not appear likely to materialize at this point. Nevertheless, Intel could still report weak Q1 results, the analyst stated. Moreover, even if its Q1 results are “fine,” analysts’ consensus outlook for the company’s Q2 results “look too high” and analysts may have to “meaningfully reset” their full-year estimates when Intel reports in April, Rasgon believes. Intel’s high inventories increase its risk in the event of weaker spending by its customers, while the company is implementing “accounting changes” that “mask” its deterioration, she charged. Rasgon set a $26 price target on the chip maker.

WHAT’S NOTABLE: Noting that Intel entered its quiet period on Friday, Deutsche Bank analyst Ross Seymore also thinks that the company probably won’t issue a negative Q1 preannouncement. He sees that as positive for the stock, given the weakness in PC sales data so far this year. However, the PC data indicates that Intel’s Q1 results will probably come in at the low end of its guidance, Seymore believes. Consequently, he lowered his estimates for the company slightly and trimmed his price target on the name to $37 from $38. Nevertheless, other growth drivers, including the company’s Internet of Things and data center businesses, will lessen its dependence on PCs going forward, causing its multiple to rise, the analyst stated. He kept a Buy rating on the shares.

PRICE ACTION: In morning trading, Intel fell 1.6% to $32.15.