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Why Inseego Stock Popped Today

By Jeremy Bowman – Jul 13, 2020 at 3:37PM

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Shares of the 5G stock gained on news of a deal between Analog Devices and Maxim Integrated Products.

What happened

Shares of Inseego (INSG -2.74%) were moving higher today as the maker of networking hardware, including 5G components, rose on a Wall Street Journal report that Analog Devices (ADI 0.69%) was planning to buy Maxim Integrated Products (MXIM) for more than $20 billion in an all-stock deal.

Since Maxim is also a 5G player, the news lifted Inseego along with other 5G stocks as it shows other chipmakers are interested in 5G acquisitions.

As of 2:18 p.m. EDT, Inseego shares were up 9.9%, while Maxim had gained 10.9% and Analog was down 3.6%.

A grid over a skyline showing  different points connecting

Image source: Getty Images.

So what

Anticipation for the rollout of 5G networks has been building this year, and Inseego has been popular among investors looking for exposure to the new technology.

Maxim has also seen interest in its 5G chips as CEO Tunc Doluca noted in the recent earnings call that the company's laser driver products were being rapidly deployed at 5G base stations, and said power and optical products for 5G base stations would also see strong year-over-year growth.  

Though a deal has yet to be finalized between Analog and Maxim, the premium that Analog is willing to pay, roughly 20% as Maxim was worth about $17 billion when it closed on Friday, shows that buyers are potentially willing to pay up for 5G exposure. According to the Journal, Maxim shareholders will receive 0.63 shares of Analog for every share of Maxim they own.

Now what

Inseego stock had already surged so far this year, up 66%, as the company was seen as a winner on the work-from-home movement from the pandemic because it sells networking devices and mobile hotspots that people use to increase connectivity and bandwidth.

5G is still a relatively small part of Inseego's business, but it said in its first-quarter earnings report that it had eight 5G access launches planned with six operators, showing momentum for the new connectivity protocol in the second half of the year. The Maxim deal appears to show the premium on 5G technology, and investors have high hopes for the "5G revolution." Inseego remains one of the more appealing options to get exposure to what could be a booming market.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Inseego Corp. Stock Quote
Inseego Corp.
INSG
$2.13 (-2.74%) $0.06
Analog Devices Stock Quote
Analog Devices
ADI
$151.89 (0.69%) $1.04
Maxim Integrated Products Stock Quote
Maxim Integrated Products
MXIM

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