Intel (INTC) Divestiture Allows Increased Focus in More Critical Areas - Morgan Stanley
Morgan Stanley analyst Joseph Moore reiterated an Equalweight rating and $61.00 price target on Intel (NASDAQ: INTC) after the Wall Street Journal reported that Intel would sell its NAND
business to Hynix for $10 bn and late Monday evening, Hynix announced that it will buy the business for 10.3 trillion won ($9 bn). The deal includes the fab, the Dalian facility, and the solid state drive intellectual property. It does not include the 3D XPoint/Optane business. The expectation is that $7 bn will be paid as of the closing date in late 2021, with an additional $2 bn payment in March 2025.
The analyst stated "We believe it has been clear for some time that Intel is structurally subscale in
the NAND space, and the company highlighted as far back as May of 2019 that it would seek potential partnerships to reduce the ongoing investment cost, in a way that would allow them to continue to participate in segments that are more strategic - particularly 3D XPoint "storage class memory," a product jointly developed with Micron that is viewed as a competitive benefit to the processor roadmap". He went on to state "the NAND business has been a significant distraction to a company that needs focus, in our view. While losses are small, the cash flow drain is more significant; less so in the last 12 months as the company has slowed its investment, but more if the company intends to continue to participate in the business".
Shares of Intel closed at $55.02 yesterday.