Intel (NASDAQ:INTC)'s Programmable Solutions Group (PSG), under the leadership of Sandra Rivera and with Shannon Poulin as COO, is set to become a standalone business on January 1, 2024. This decision follows a series of successful ventures, including record revenues and the Mobileye IPO in 2022. It also aligns with Intel's IDM 2.0 strategy, which has drawn investments from Bain Capital Special Situations and TSMC into its IMS Nanofabrication subsidiary.
The spin-off is part of Intel's broader strategy to concentrate on its core business while simultaneously launching new products. The company plans to roll out 15 new products in 2023, including the Intel Agilex® 7 with R-Tile chipset. PSG will continue its strategic relationship with Intel Foundry Services (IFS) for supply resilience, supported by the Supply Resilience program pilot.
A future initial public offering (IPO) for PSG is anticipated within two to three years. The objective of this IPO is to enhance PSG's share in the Field-Programmable Gate Array (FPGA) market, which is estimated to reach $11.5 billion by 2027.
The decision to transform PSG into a separate entity has elicited mixed reactions from Wall Street analysts. Harlan Sur from J.P. Morgan maintains a Sell outlook on Intel's stock and envisions a future IPO for PSG. He values the group between $20 billion and $25 billion, comparing it to AMD’s acquisition of Xilinx (NASDAQ:XLNX). Despite potential delays in the IPO, Sur supports the spin-off decision.
On the other hand, Gus Richard from Northland Securities perceives Intel as dividing into four distinct entities and calculates a sum-of-the-parts valuation at $56 per share, surpassing Intel’s current market price. Richard sets a price target of $56 for Intel, suggesting a potential 57.3% stock value increase.
The prevailing analyst sentiment is to Hold INTC stock, with six Buys, 20 Holds, and five Sells. According to InvestingPro data, Intel's market cap stands at $150.81B, with a negative P/E ratio of -161.31, reflecting the company's struggles with profitability. The company's revenue stands at $54.04B, with a decline of -26.36% as of Q2 2023.
Intel has a history of maintaining dividend payments, having done so for 32 consecutive years, according to InvestingPro Tips. This consistent dividend payment is a testament to Intel's financial stability, despite the declining trend in earnings per share and the anticipated sales decline in the current year. Intel is a prominent player in the Semiconductors and Semiconductor Equipment industry, and while the net income is expected to drop this year, analysts predict the company will be profitable this year.
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