Intel Corporation (NASDAQ:INTC) shares traded higher by 8% on Tuesday morning after the company announced a plan to take its self-driving car unit Mobileye public in mid-2022. The market reacted positively to the news, and one analyst said Tuesday the IPO could be a great way for Intel to unlock value in its struggling shares.

The Analyst: Bank of America analyst Vivek Arya reiterated his Underperform rating for Intel but raised his price target from $45 to $50.

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Some media outlets suggest Mobileye could be valued at roughly $50 billion, but Arya says Intel investors need to keep the IPO in perspective.

“The planned IPO of 2% of the business doesn’t address the core challenges around 90% of INTC’s core business in PC/Server share losses against AMD/NVDA nor the potential for large capex investments that could pressure INTC’s margins for an extended period of time,” Arya said.

Still, Arya believes the Mobileye IPO is a “smart move to unlock value” given the current market excitement surrounding AV stocks.

Benzinga’s Take: Intel still needs to demonstrate to investors it can keep pace with AMD and Nvidia in next-generation semiconductor technology. However, with Intel stock trading at just 13.7 times forward earnings, additional valuation downside may be limited after the recent pullback.

Also See: Intel CEO Expresses Conviction Over Accomplishing 5-Year Goals At Credit Suisse Conference

Photo: Courtesy of intel.com