Back when chip stock Intel (INTC) was looking to sell off portions of itself to raise cash, some wondered how long it would be before Intel moved to sell its stake in Mobileye (MBLY). And for a while, it looked like Intel might hold on to Mobileye until the bitter end. But that appears to be turning around, as Intel is reportedly selling off at least some of its Mobileye holdings. The news did not sit well with investors, who sent shares sliding fractionally in Wednesday afternoon’s trading.
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Late last night, Mobileye announced Intel will be selling 45 million shares, worth a combined total of around $900 million. The sale is substantial in its value based on numbers, but not so much on a percentage basis. Previously, Intel owned around 88% of Mobileye, reports noted. Once the shares are sold, Intel will own around 80% instead.
Interestingly, Mobileye itself will account for $100 million of that sale, agreeing to buy back shares accordingly. But Intel selling off a substantial portion of its Mobileye holdings merely represents the latest in a series of moves designed to slim down Intel and make it “…leaner, faster, and more efficient….”
A Good Entry Point?
It would be easy to discount Intel right now, to suggest that it is simply a hidebound dinosaur clinging to the markets of the past, getting its lunch eaten by old rivals and new up-and-comers who moved faster. But some analysts suggest that what we are seeing from Intel right now—the sell-offs, the layoffs, the pivots—are signs of actual “humility.”
Indeed, the report suggests, Intel’s recent plan to shutter the 18A process and instead put everything into 14A is being regarded as “focus” as opposed to “capitulation.” Other signs are pointing to new “governance realignment,” “capital discipline,” and “customer segmentation.” All these points and more, the report ultimately noted, are reasons to reconsider Intel as a safe place to put investment dollars.
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 26 Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 36.4% loss in its share price over the past year, the average INTC price target of $21.44 per share implies 8.32% downside risk.
