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

• Dealmaking activity in the US remained relatively flat in the fourth quarter, according to Morgan Stanley.
• However, the tech sector still stands out as having the highest so-called offer intensity of any sector.
• The bank recently updated its model that forecasts the companies likeliest to receive offers within the next 12 months.
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Corporate dealmaking in the US increased slightly in the fourth quarter of last year. But the relatively flat trend that has prevailed since early 2017 remains in place, according to quantitative strategists at Morgan Stanley.

The team led by Boris Lerner attributed the slowdown to executives' worries about a decline in economic activity amid flat profits. Even the stock market's rally, which gained speed at the end of the year, was not enough to spur dealmaking.

But the tech sector stands out. Its offer intensity, or the number of merger and acquisition offers relative to the number of companies within the sector, is at the 82nd percentile. That's the highest of any S&P 500 sector, according to Lerner.

He added that offer intensity has a "momentum-like component," meaning that dealmaking tends to snowball.

Lerner's team recently updated its Acquisition Likelihood Estimate Rankings Tool (or ALERT), which screens the largest 1,000 stocks by market cap and ranks likely deal targets using factors like debt-to-assets ratio and dividend yield. Nine percent of the companies identified by the model in the fourth quarter of 2018 received an offer within the subsequent 12 months, Lerner said.

The ALERT model excludes companies that have been rumored or reported by the media to be on the verge of M&A deals.

Listed below are the 12 tech stocks that Lerner's team identified in a January 22 note as the likeliest M&A candidates. These companies may be acquired at premiums to their current prices, meaning that shareholders stand to profit.

They are ranked in ascending order of their size by market cap, and closing prices are as of January 17.