Shares of microchip developer Intel (INTC) surged into the close on Friday after The Wall Street Journal published an article saying that rival chipmaker Qualcomm (QCOM) is interested in a takeover.
The article cited unnamed sources claiming that Qualcomm executives have approached Intel about a potential takeover, but that “a deal is far from certain.” Shortly after markets closed for the weekend, INTC stock rose as much as 7% as reports of a potential takeover by Qualcomm spread. QCOM stock dropped nearly 5% in extended trading on the news.
Intel on the Ropes
The approach from Qualcomm comes at a difficult time for Intel. INTC stock is down 55% this year and one of the worst performers in the benchmark S&P 500 index. Intel’s stock has been roiled by a series of subpar financial results. The company recently announced plans to spinoff its foundry business that makes microchips and processors for other companies into a subsidiary.
Intel has also announced plans to eliminate 15,000 jobs and suspended its quarterly dividend payment to shareholders. There have been rumors that INTC stock might be removed from the blue-chip Dow Jones Industrial Average the next time the index is rebalanced. Intel has spent $25 billion on developing its foundry business in each of the last two years, but the shift in direction from designing microchips to also manufacturing them has been plagued by delays and generated little revenue for the company.
Is INTC Stock a Buy?
There is currently a consensus Hold rating on INTC stock among 34 Wall Street analysts. This rating is based on one Buy, 26 Hold, and seven Sell recommendations made in the last three months. The average price target on INTC stock of $25.47 implies 16.62% upside potential from current levels.
