Intel Corporation (INTC) Stock Still Not a Buy, Mobileye NV (MBLY) or Not

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Mobileye NV (NYSE:MBLY) is a company I’ve liked for a long time, and I’ve been pounding the table on it especially hard since January. It was a stock I wanted all of my subscribers to own, and owning it certainly paid off on Monday when it was announced that Intel Corporation (NASDAQ:INTC) would buy the company for a 34.5% premium over Friday’s closing price.

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But that doesn’t make INTC stock any more attractive to me.

Intel will pay $63.54 a share, or about $15.3 billion, for Mobileye. The report came out first in an Israeli newspaper, then INTC made the formal announcement.

As you may recall, the two companies were already partners, joining forces with BMW last year to put 40 autonomous 7-Series sedans on the road by the end of 2017 to train them to drive in urban areas. The goal of the partnership is to have fully autonomous vehicles on the market by 2021.

Mobileye is a key player and innovation leader in the autonomous automobile industry — think driverless cars, driver assistance, collisions avoidance, etc. It’s in one of the hottest spaces in technology, and I’ve said for some time that it is an idea I believe will come to fruition much sooner than many expect.

The driverless car in particular is one of the real potential wow factors right now.

The acquisition is not only expected to accelerate innovation within the industry, but it’s also anticipated to position Intel as a leading player. On the press release, management said:

“The transaction extends Intel’s strategy to invest in data-intensive market opportunities that build on the company’s strength in computing and connectivity from the cloud, through the network, to the device.”

The deal is expected to close within the next nine months and should be immediately accretive to both Intel’s earnings and free cash flow.

INTC Stock Has Its Own Problems

Now, I don’t always like to toot my own horn, but this is a deal I have felt for a long time would eventually happen.

In fact, in August 2015 I said on my Fox Business Show, Making Money with Charles Payne, that I felt MBLY stock was worth hanging on to as I suspected it would be acquired one day. I’m glad I was right, because my Smart Portfolio subscribers locked in a 47% profit in two months.

But just because I was hot on MBLY doesn’t mean that translates to Intel.

I actually don’t like INTC stock much in part because it’s always been too PC-centric. Management is trying to address that with the Mobileye deal, but there is a reason to be concerned with the transition, as Intel doesn’t have a great track record on assimilating its acquired businesses.

On that note, however, I do believe the company needs to do even more deals.

Intel has $31 billion in cash and cash equivalents offshore, half of which the company will use to purchase Mobileye. But with the Trump administration dangling a big break in repatriation taxes, INTC stock decided to stay relevant. I also wonder if management is hinting that it will take too long to get breaks on profits earned overseas.

I’ll continue to keep an eye on the autonomous vehicle space as I still believe it will be a big winner, but for now I don’t see the urgency to buy INTC stock unless perhaps you’re happy with it as an income play (its current yield is nearly 3%).

If it’s sitting in your account, though, I wouldn’t tell you to sell.

Curious what Wall Street insider Charles Payne really thinks? Get more behind-the-scenes insights, valuable market research and hands-on guidance including live stock recommendations from Fox Business’s rising star. Charles Payne’s Smart Talk is absolutely FREE for a limited-time only. Sign up today!


Article printed from InvestorPlace Media, https://investorplace.com/2017/03/intel-corporation-intc-stock-still-not-a-buy-mobileye-nv-mbly-or-not/.

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