Is Intel Corporation (INTC) Waiting in the Wings for a Failed QCOM Takeover of AVGO? Analyst Weighs In

RBC Capital's Amit Daryanani sees potential for an enticing M&A opportunity for Intel- but are there complications at bay?

Is Intel Corporation (NASDAQ:INTC) looking to buy Broadcom?

Wall Street Journal was buzzing Friday evening that this chip player was teaming up with advisors to delve into what an offer would entail to take over AVGO- assuming that the rumored Qualcom merger does not come to pass.

RBC Capital analyst Amit Daryanani muses, “there is accretion but also telenovela like drama.”

“We think AVGO (assuming a reasonable valuation is paid) would be an attractive acquisition for INTC. Our analysis shows the deal would be 85c-90c/20%+ accretive and would provide multiple positives for INTC: 1) A leading position in filtering and connectivity, given AVGO’s best-in-class FBAR and wifi/bluetooth combo assets, 2) Ability to build an ecosystem around cloud and enterprise, given AVGO’s assets in switching, routing (Tomahawk, Jericho, Trident) and storage, 3) Bigger AI opportunities, as we note AVGO is doing ASICs for machine learning workload, and 4) Material accretion potential over the coming years. In our analysis, we assume INTC funds the deal with debt and equity; this would potentially increase leverage to a manageable ~4x Net-Debt/EBITDA.”

However, considering Daryanani spotlights increased regulator scrutiny when it comes to these kinds of high-profile M&A agreements, this may “further complicate” the company’s alleged interest in an AVGO transaction.

For now, the analyst reiterates a Sector Perform rating on INTC stock with a $46 price target, which implies a close to 10% downside from current levels. (To watch Daryanani’s track record, click here)

Intel shares are down nearly 2% to $51.34, as of this writing.

TipRanks highlights a cautious Wall Street leaning towards the bullish camp on Intel’s opportunity in the market. Out of 24 analysts polled in the last 3 months, 16 rate a Buy on INTC stock, 5 maintain a Hold, while 3 issue a Sell on the stock. The 12-month target price stands at $52.00, marking a slight 2% upside from where the stock is currently trading.


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