Analysts are speculating about the future of Xilinx (XLNX) ever since rumors of Intel (INTC) buying Altera (ALTR) surfaced. Xilinx, a leader in semiconductors and pioneer of the FPGA circuit, is a rival of Altera, and analysts believe Xilinx may be next in line for a merger.
Reports are that Intel is in talks to purchase Altera for more than $10 billion, which would mark Intel’s largest acquisition. Intel and Altera already work closely together and many see this potential acquisition as an organic transition. Altera and Xilinx compete in the FPGA market and analysts speculate that IBM (IBM) or Qulacomm (QCOM) could be eyeing Xilinx as an attractive buy.
Analysts weighed in on Xilinx following the rumors.
Srini Pajjuri of CLSA maintained an Outperform on Xilinx on March 30 but did not provide a price target. If it is true that Intel is taking over Altera, Pajjuri does not think it will have a significant impact on Xilinx because “Intel was already in the process of manufacturing Altera products.” The analyst continues, “Xilinx could also benefit from potential integration issues, although we don’t expect many. We won’t rule out the possibility that Xilinx becomes a target down the road, especially as Qualcomm looks to diversify away from low-margin smartphone chips.”
Srini Pajjuri has a 39% overall success rate recommending stocks with a -5.2% negative return per recommendation.
Separately on March 30, analyst Ian Ing of MKM Partners downgraded Xilinx from Buy to Neutral with an unchanged $45 price target. Ing does not think rumors of Intel acquiring Altera mean that Xilinx is next in line for an acquisition because there is “little strategic fit for a second field-programmable gate array (FPGA) acquisition.” He notes that if the acquisition rumors are true, “an Intel for Altera deal creates a stronger competitor” with “captive foundry access and greater reach in data centers and networking.” Furthermore, Ing continued, “the FPGA model of specialized processing becoming less favored by hardware-commoditization trends” because the “FPGA model is increasingly disadvantaged by the trend from specialized processing to general purpose processing.”
Ian Ing has a 79% overall success rate recommending stocks with a +32.3% average return per recommendation.
Overall, the top analyst consensus for Xilinx on TipRanks is Hold.
To see more recommendations for Xilinx, visit TipRanks today.
Sarah Roden writes about stock market news. She can be reached at [email protected].
