Shares of Fossil Group (FOSL) are slightly lower in an up market after an analyst from Macquarie said that Intel's (INTC) potential exit from the wearable space could hurt the fashion designer and watch maker going forward.

WHAT'S NEW: In a research note, Macquarie analyst Laurent Vasilescu noted that, according to several media sources this week, Intel could exit the wearable space. The analyst also noted that Intel's wearable brand Basis will shut down as of December 31, 2016. Vasilescu argued in the research note that Intel's possible abandonment of wearable technologies may have "important negative ramifications" for Fossil Group, as Intel is the hardware component provider for Fossil's wearable initiative. The analyst noted that in a note published last year the firm outlined concerns that Fossil kept forming partnerships with tech companies that have gone nowhere with wearables, including Microsoft (MSFT), Palm, Sony Ericsson (SNE), and Meta. While it has yet to be seen if Intel completely moves on from the wearables sector, the layoffs in its wearable division as well as the closing of Basis indicate that a further pull back by Intel is in play, which would not be good if Fossil depends on Intel's hardware expertise for wearables, the analyst contends. Vasilescu added that he is concerned that the wearable initiative is "too little too late" and that proof of concept is "very much in question" after so many previous partnerships have come and gone for Fossil. The analyst maintained an Underperform rating and $20 price target on Fossil shares.

OTHER ANALYST OPINIONS: On the other hand, Piper Jaffray analyst Erinn Murphy upgraded Fossil Group to Neutral from Underweight and raised her price target for the shares to $32 from $23 earlier this week, saying that the company has the opportunity to cut costs and that its potential with hybrid watches is being underappreciated. Murphy added that, with its foray into wearables, the company has doubled its point of distribution potential with opportunities in the consumer electronics channel. In addition, Pacific Crest analyst Edward Yuma upgraded the stock to Overweight with a $42 price target last week, saying that strong momentum in wearables can continue. Yuma said that wearables should drive an inflection in sales and earnings and that reception to Fossil's new wearables "remains very strong."

PRICE ACTION: In morning trading, Fossil dropped about 0.8% to $36.32 per share.