NEW YORK (TheStreet) -- Shares of Altera Corp (ALTR) were nearly flat, slightly higher by 0.02% to $51.69 in late morning trading Tuesday, after analysts at Raymond James downgraded the company to "market perform" from "outperform" earlier this morning.
Yesterday, Intel (INTC) announced that it is acquiring Altera for $54 per share in cash, valuing the deal at roughly $16.7 billion.
The deal will allow Intel to acquire Altera's data-center microchip business and its programmable chips to boost web traffic speeds.
In addition, analysts at BMO Capital Markets downgraded Intel to "market perform" from "outperform" this morning. The firm reduced its price target on shares of Intel to $33 from $40.
BMO analysts said they believe Altera is worth only $28 per share on a standalone basis and does not like the valuation Intel paid for the company.
The acquisition would help Intel defend a crucial semiconductor business, according to The Wall Street Journal.
Altera previously turned down Intel's $54 per share unsolicited offer in April, The Journal noted.
San Jose, Calif.-based Altera is a semiconductor company that designs and sells products serving a range of customers within the telecom and wireless, industrial automation, military and automotive, networking, computer, and storage and vertical markets.
Separately, TheStreet Ratings team rates ALTERA CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate ALTERA CORP (ALTR) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, ALTR's share price has jumped by 41.26%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ALTR should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The current debt-to-equity ratio, 0.45, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 4.41, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has slightly increased to $136.63 million or 4.75% when compared to the same quarter last year. Despite an increase in cash flow, ALTERA CORP's cash flow growth rate is still lower than the industry average growth rate of 20.26%.
- The gross profit margin for ALTERA CORP is rather high; currently it is at 67.05%. Regardless of ALTR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ALTR's net profit margin of 21.78% compares favorably to the industry average.
- ALTR, with its decline in revenue, slightly underperformed the industry average of 0.8%. Since the same quarter one year prior, revenues slightly dropped by 5.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: ALTR Ratings Report