STOCKS NEWS EUROPE-Infineon falls on BofA Merrill Lynch downgrade

Shares in German chip maker Infineon (Xetra: 623100 - news) are down 2.8 percent to 8.34 euros, making them the biggest decliners on the German blue-chip index DAX index as Bank of America Merrill Lynch cuts its rating to "underperform" from "neutral", traders say.

"We expect Infineon to report a good set of results and guidance for the second and third quarter, driven potentially by solid automotive demand and inventory restocking," BofA Merrill Lynch analysts write in a note. "However, the recent stock performance leads us to believe that expectations are already pricing in a beat and raise."

The shares' valuation was already at peak multiples, the analysts add, saying they do not see a reason for the shares to rise even higher. They lower their target price to 7.30 euros from 7.90 euros.

Reuters messaging rm://kirsti.knolle.thomsonreuters.com@reuters.net