Market Overview

Mobileye Purchase Is A Critical Step In Intel's Transformation Beyond Just A PC Company

Mobileye Purchase Is A Critical Step In Intel's Transformation Beyond Just A PC Company
Related INTC
How To Approach Q4 Earnings: The Global Perspective
Intel CEO Touts Exposure To $300B Market
Apple: Rethinking The iPhone (Seeking Alpha)
Related MBLY
The Web Widens: Fiat Chrysler, BMW, Daimler Hitch Rides In Autonomy, Ride-Hailing Race
TD Ameritrade Investor Movement Index: Bullish Retail Investors Push IMX Above 7.0 For First Time

Betsy Van Hees of Loop Capital says Intel Corporation (NASDAQ: INTC)’s deal to buy Mobileye NV (NYSE: MBLY) is a critical step in the transformation of the chip maker beyond being just a PC company.

Intel agreed to buy Israel-based Mobileye for about $15.3 billion, as part of its move to expand in the fast-growing market for fully autonomous vehicles.

Van Hees, who reiterated Buy rating and $42 price target on Intel, noted that the deal puts Intel in a leading position in an end market that is more predictable and steady with considerable long-term growth opportunities.

“We weren't surprised by the pending acquisition given INTC’s already strong partnership with MBLY and view it as a considerable positive as this leap frogs INTC’s position within the nascent autonomous car market and opens INTC up to $70B system, data, and services TAM by 2030,” Van Hees wrote in a note.

From the deal, Intel gets a strong base business with deep design-win pipeline and enhanced MSS and revenue opportunities through superior AD platforms. Intel also sees considerable recurring revenue streams in mapping and data services and expects to achieve cost synergies rising to $175 million per year by 2019.

Lessons Learned From Past

The combined global autonomous driving organization, which will consist of Mobileye and Intel's Automated Driving Group, will be headquartered in Israel and led by Prof. Amnon Shashua, Mobileye's Co-Founder, Chairman and CTO.

Van Hees says Intel might have learned some lessons from the unsuccessful track record with its prior acquisitions and may have opted for the reverse integration.

Shares of Intel closed Monday at $35.16, while Mobileye ended at $60.62.


Wall Street's M&A Chatter From March 13

Citigroup, JPMorgan, Goldman Sachs And Intel: Fast Money Picks For March 14

Latest Ratings for INTC

Jan 2019Bank of AmericaUpgradesNeutralBuy
Dec 2018Morgan StanleyMaintainsEqual-WeightEqual-Weight
Nov 2018DZ BankDowngradesBuyHold

View More Analyst Ratings for INTC
View the Latest Analyst Ratings

Posted-In: Betsy Van Hees Loop CapitalAnalyst Color News Reiteration M&A Analyst Ratings Best of Benzinga


Related Articles (INTC + MBLY)

View Comments and Join the Discussion!

Latest Ratings

CGBDJP MorganUpgrades15.5
NLYJP MorganUpgrades10.5
NTNXMorgan StanleyUpgrades58.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Valeant Investors Exit Along With Ackman

Live Cattle Futures Move Down