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On Monday, Stifel analysts maintained a Hold rating on Intel stock (NASDAQ:INTC) with a steady price target of $21.00, aligning with the broader analyst consensus according to InvestingPro data. The firm acknowledged that while Intel’s sale of Altera indicates a loss from its $16.7 billion purchase price in 2015, it views the move as a positive step for the tech giant, which currently commands a market capitalization of $88 billion. The analysts noted that the deal’s valuation is modest compared to Altera’s closest competitor, Lattice (OTC:LTTC) Semiconductor, which boasts a price-to-sales multiple of 11.4x. This discrepancy is attributed to differences in growth and margin profiles between the companies.
The analysts expressed optimism about Intel’s strategic direction under the leadership of CEO Lip Bu Tan, who took the helm a few months ago. They believe Tan’s focus on reshaping Intel’s operations and leveraging his extensive industry connections is already bearing fruit, as evidenced by the Altera transaction. The deal is seen as a strategic realignment, positioning Altera for potential margin and sales growth improvements, which could, in turn, benefit Intel.
By retaining a minority stake and partnering with a key financial backer, Intel is expected to see non-controlling interest (NCI) gains on its income statement and a stronger balance sheet. The analysts also anticipate that Altera’s adjusted gross margin of 49.9% and adjusted operating margin of 2.3% in FY24 could see enhancements. This comes as Intel faces its own financial challenges, with InvestingPro data showing negative free cash flow of $15.66 billion and operating revenue of $53.1 billion in the last twelve months.
The partnership with Altera is also designed to allow Intel to concentrate on advancing its core Products and Foundry segments. With Altera utilizing Intel’s foundry services, the collaboration is expected to be mutually beneficial. The analysts project that if Altera can reverse its forecasted low-single-digit sales decline in FY25, it would provide an incremental boost to Intel’s performance. Investors looking for deeper insights can access Intel’s comprehensive Pro Research Report, available exclusively on InvestingPro, ahead of the company’s next earnings release on April 24, 2025.
In other recent news, Intel Corporation has announced a significant transaction involving its Altera business, selling a 51% stake to private equity firm Silver Lake. This deal values Altera at approximately $8.75 billion and is expected to close in the second half of 2025. The sale aligns with Intel’s strategy to concentrate on its core business operations while allowing Altera to emerge as a standalone entity in the FPGA semiconductor market. Furthermore, Baird has maintained a Neutral rating for Intel, with a $20 price target following the announcement.
In terms of financial performance, Altera reported revenues of $1.54 billion for 2024, alongside a non-GAAP gross margin of 49.9% and a non-GAAP operating margin of 0.23%. The transaction will result in Intel deconsolidating Altera’s financial results from its consolidated statements. Additionally, the China Semiconductor Industry Association’s recent notice on tariffs has impacted semiconductor companies, including Intel, due to the classification of chip origins for customs purposes.
Intel, among others, could face significant tariffs due to its U.S.-based fabrication plants, which might affect its operations in the Chinese market. Analysts from Stifel have also adjusted their coverage estimates for Intel, anticipating challenges due to the economic climate and tariff impacts. Despite these developments, Intel’s partnership with Silver Lake and the leadership of Raghib Hussain as Altera’s new CEO are seen as positive steps for Altera’s future growth in AI-driven markets.
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