It was just under a month ago when we heard about chip stock Intel (INTC) and its plan to buy back 49% of Fab 34, a chip manufacturing operation in Ireland that Intel had previously sold to Apollo Global Management (APO). Recent reports reveal just how Intel plans to get the cash together for such a buy, and it will in part involve a bond sale. That news left shareholders a bit thrown off, and Intel shares dipped fractionally in Tuesday afternoon’s trading.
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Intel plans to sell bonds in five tranches overall, and maturities on the bonds will go anywhere from five years to 40 as Intel looks to raise cash toward the $14.2 billion it needs to buy the plant interest back. The longest-tenored note, reports note, will run 1.65 percentage points above a Treasury issue. Intel hopes to raise $6.5 billion from the bond sale.
Intel previously sold the 49% interest in the fab to Apollo for $11.2 billion, so it will have to pay extra to get that back. But with a sales forecast that raised eyebrows and a market hungry for nearly any kind of chip—even Intel’s scrap chips are drawing a certain amount of interest—it is clear that Intel needs all the production facilities it can get its hands on right now.
A Surprise Win
Meanwhile, reports note that Intel managed to take on a titan in the field, and win. It turns out that the Wildcat Lake processors recently went up against those in the MacBook Neo from Apple (AAPL), and delivered a win in multi-threaded testing.
The win was partial, however. While Wildcat Lake lost to the A19 Pro chip, it ruined the A18 Pro to an impressive degree. The Wildcat Lake chip—the Intel Core 5 320—managed to beat the A18 Pro by as much as 27%. If Intel can keep the lid on prices—no small feat during a chip shortage—it may just have a winner here, which is just what it could use as it seeks to regain lost market share.
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on nine Buys, 23 Holds and three Sells assigned in the past three months, as indicated by the graphic below. After a 317.85% rally in its share price over the past year, the average INTC price target of $77.27 per share implies 8.1% downside risk.
