BMO Capital Downgrades Intel, Questions Rationale Of Altera Acquisition
In a report published Tuesday, BMO Capital analyst Ambrish Srivastava downgraded the rating on Intel Corporation (NASDAQ: INTC) from Outperform to Market Perform, while reducing the price target from $40 to $33, following Intel's announcement of its acquisition of Altera Corporation (NASDAQ: ALTR).
"We really do not see the opportunity/rationale that Intel is laying out for parting with ~$17 billion. Specifically, we do not concur with Intel's assumption of 7 percent CAGR for the business. Altera has grown at a negative CAGR of 2 percent in the midst of one of the more aggressive carrier CapEx builds we have seen," Srivastava said.
The analyst also expressed dissatisfaction with the valuation being paid for Altera, while expressing concern regarding the ability of this deal to add value for shareholders in the long term.-The analyst also expressed disappointment regarding the lack of details regarding the deal.
"And finally, while Intel generates plenty of free cash flow, and we do not know ultimately how much debt Intel will end up issuing to finance the deal, potentially in the range of $7 billion to $12 billion, in the medium turn, it could lead to potentially reduced capital return via share repurchase, something we have lauded Intel in the past for," the BMO Capital report added.
Latest Ratings for INTC
|Oct 2016||Charter Equity||Upgrades||Market Perform||Buy|
|Oct 2016||Deutsche Bank||Maintains||Buy|
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