Mario Tama
On Tuesday, it was revealed that Intel (NASDAQ:INTC) plans to sell 45M Class A shares of its stake in Mobileye (NASDAQ:MBLY), an Israel-based tech company that specializes in developing autonomous driving systems.
Wells Fargo finds this development positive for Mobileye. The bank reiterated its Overweight rating on the stock and increased its price target to $24 from $18.
Intel held 711.5M Class B shares, or 87.6%, of Mobileye at the end of the first quarter, according to Wells Fargo. Intel also plans to convert 50M Class B shares into Class A.
“That said, we expect investors to focus on the potential for Intel to unwind its position further at a future date,” said Wells Fargo analysts, led by Aaron Rakers, in an investor note. “In conjunction with the secondary offering, MBLY has agreed to purchase $100M of Class A common stock at a price per share equal to the price to be paid by the underwriters in the offering (note: equates to ~5.36M shares at 7/8 closing price).”
Mobileye updated its second quarter guidance on Tuesday as well, which was above the consensus estimate.
“MBLY has also announced that it has entered into a long-term supply agreement with TSMC (NYSE:TSM) for the manufacturing of the company’s internal imaging radar and ‘some’ of its future generations of EyeQ SoCs – diversifying from its long-standing relationship with STMicroelectronics (STM) for EyeQ products,” Rakers added.
Mobileye was up 2% during early market action on Wednesday.
More on Mobileye Global, Intel and TSMC
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- Taiwan Semiconductor: Q2 Earnings Will Test Its Moat
- Intel Value Trap: The Potential 18A To 14A Shift In Foundry
- Mobileye announces secondary offering of shares, concurrent repurchase, conversion
- Intel increases 6% as its begins to implement layoffs at Oregon campuses: report