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On Monday, BofA Securities maintained a Neutral rating on Intel stock with a price target of $25.00, following the announcement that Intel has agreed to sell a majority stake in its FPGA business, Altera, to Silver Lake. According to InvestingPro data, Intel’s stock currently trades at $20.31, significantly below its 52-week high of $37.16, reflecting recent market challenges. The company’s market capitalization stands at $89.09 billion. The transaction, expected to be completed in the second half of 2025, values Altera at approximately $8.75 billion. This is significantly less than the $16.7 billion Intel paid for Altera in 2015.
Intel stated that the sale of 51% of Altera aligns with CEO Lip-Bu Tan’s strategy to focus on the company’s core x86 business. The deal also aims to enhance the operational efficiency of both Intel and Altera. This strategic move comes as InvestingPro analysis shows Intel burning through cash, with negative free cash flow of $15.66 billion in the last twelve months and a weak overall Financial Health Score. The appointment of Raghib Hussain as Altera’s new CEO is anticipated to boost the company’s product competitiveness and market position, especially in the mid-range sector, where it has been losing share to competitor Lattice (OTC:LTTC) Semiconductor Corporation (LSCC).
The additional funds from the sale are expected to support Intel’s investments in its future 18A/14A nodes and its broader 3-4+ year turnaround plan. This may involve further reductions in operating expenses and capital expenditures as part of the new CEO’s strategy to realign spending.
Despite the potential benefits of the transaction, BofA Securities analysts have noted that the sale could be dilutive to Intel’s long-term earnings per share, considering Altera’s historically high-margin profile. Once the deal is finalized, Intel will deconsolidate Altera’s financial results from its own.
The analysts also highlighted concerns for Intel, including the increasing competition in its primary x86 CPU market, the lack of an AI accelerator portfolio, and the relatively small scale of its foundry services. Additionally, the transaction may have a modest negative impact on FPGA peer Lattice Semiconductor, in terms of competition and valuation. While Intel reported $53.1 billion in revenue last year, InvestingPro analysts project a return to profitability this year, with an EPS forecast of $0.47 for 2025. For deeper insights into Intel’s valuation and growth prospects, including 6 additional ProTips and comprehensive financial analysis, check out the Pro Research Report available on InvestingPro.
In other recent news, Intel Corporation (NASDAQ:INTC) announced the sale of a 51% stake in its Altera subsidiary to Silver Lake, valuing Altera at $8.75 billion. This move is part of Intel’s strategy to focus on its core operations while maintaining a 49% stake in Altera, which will become a standalone entity. The deal is expected to close in the second half of 2025. Following the transaction, Intel’s CEO Sandra Rivera will step down, with Raghib Hussain set to assume the role of Altera’s CEO in May 2025. Analysts from Needham have reiterated a Hold rating on Intel, noting the exclusion of Altera’s projected revenues from their financial model. Stifel analysts also maintained a Hold rating, viewing the sale as a positive strategic shift for Intel. Baird reaffirmed a Neutral rating, highlighting Altera’s potential to regain market share in high-end FPGA applications. Additionally, Intel faces potential challenges from China’s tariff policies, which could impact its U.S.-based manufacturing operations.
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