Raymond James: Altera-Intel Deal Still On

Shares of Intel Corporation INTC and Altera Corporation ALTR rebounded Thursday afternoon from earlier losses amid a report from Raymond James on the proposed deal between the two companies.

Earlier in the day, CNBC’s David Faber tweeted that the deal for Intel to acquire Altera was off.

Analysts Hans Mosesmann and Melissa Fairbanks issued a company brief later in the day and commented that they “would not be surprised if today’s news was leaked by Intel in an attempt to compel Altera to reach an agreement.”

However, the analysts thought “such a move could backfire, with Intel demonstrating weakness and remaining in a defensive position.”

The two analysts suspected that Altera would demand “something with a six-handle, suggesting a +30x multiple on 2016 earnings” in comparison with Intel’s reported offer in the low-20s multiple, which was “in line with Altera’s five-year trading average.”

“We would expect Intel to rethink this acquisition, as without it, we see continued secular decline in the value of x86 as an architecture capturing north of 70 percent margins in the datacenter – perhaps at an accelerated pace as a result of ongoing disaggregation trends and the emergence of ARM-based processors,” the analysts wrote.

The firm maintained an Underperform rating on Intel.

Intel Corporation recently traded at $31.52, up 0.67 percent while Altera Corporation recently traded at $43.57, up 3.74 percent.