Send me real-time posts from this site at my email
Alex Cho

Nomura Reiterates $40 Price Target on Intel

Romit Shah at Nomura Instinet reiterated his buy recommendation on Intel and his $40 price target on Intel. That being the case, he mentioned that near-term accretion is limited, but remains optimistic on long-term upside.

Here was the key highlight to the report released to Nomura clients a couple days ago:

We estimate the deal will be ~2% accretive to CY18 EPS; management guides to $175mn in cost synergies. Our analysis suggests that Intel will now earn $3.07 for CY18 EPS, up from our $3.00 stand-alone estimate, implying that the deal is ~2% accretive. Intel will finance the $15bn acquisition using offshore cash, which, as of Dec ’16, was $13.6bn (vs. $17.1bn total cash balance). The deal is targeted to close within nine months (end of CY17) and the company expects the deal to be immediately accretive to non-GAAP EPS and FCF. Intel guided for annual cost synergies of $175mn by 2019 (mainly from R&D) and incremental tax related benefits.

His comments on near-term accretion is reasonable, though we differ on Intel upside, as I’m more neutral if not bearish on Intel’s gross margins and headwinds from competition.

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue