MORGAN STANLEY: These 11 large tech companies are most likely to get acquired within the next 12 months

Andrew Kelly/Reuters

• The technology sector saw the largest increase in M&A activity during the second quarter, according to Morgan Stanley.
• This dealmaking buzz occurred amid a marketwide slump, as companies focus on returning more capital to shareholders.
• Morgan Stanley updated its screen of large companies that are most likely to be acquired over the next 12 months.
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The tech sector is ahead of the pack when it comes to corporate mergers and acquisitions.

Tech saw the biggest increase in M&A activity during the second quarter, according to Morgan Stanley.

The sector is also one of only three on the S&P 500 where dealmaking remains well above median levels. Across sectors, executives have slowed their dealmaking activity and are instead choosing to return more capital to shareholders as the end of the business cycle approaches, Morgan Stanley said.

But should any companies venture out into the dealmaking wild, the quant strategists have provided their best guesses as to who they will be.

They recently updated their Acquisition Likelihood Estimate Rankings Tool, which ranks likely deal targets by combining factors such as market cap, debt-to-assets, and dividend yield. For example, companies with more debt relative to assets are seen as more likely to get offers, and those in sectors where lots of recent offers have been made screen highly on the list.

The so-called ALERT tool excludes stocks that have been reported or rumored to be on the verge of M&A deals. That means the list is purely a product of Morgan Stanley's research.

"Investors can use the ALERT model as a screening tool for fundamental research on potential M&A candidates," the strategists led by Boris Lerner said in a recent note.

"Being underweight or short potential takeover targets can be risky; ALERT can flag this possible risk for managers. ALERT can also help the quantitative managers with alpha models to identify stocks with higher probabilities of receiving offers, so they can create overlays to mitigate this risk."

Below are the 11 tech stocks that screened the highest.