NXP Semi Stock Is A Buy On Weakness, Most Attractive Analog Name In Space: Analyst

Cantor Fitzgerald analyst C J Muse reiterated NXP Semiconductors NXPI with an Overweight and a $350 price target.

On Monday, NXP Semiconductors reported second-quarter revenue decreased 5% year-over-year to $3.127 billion, beating analyst consensus estimates of $3.125 billion. The company reported adjusted EPS of $3.20, lagging the analyst consensus estimates of $3.21.

NXP Semiconductors expects third-quarter revenue of $3.15 billion—$3.35 billion, compared to consensus estimates of $3.35 billion. The company projects third-quarter adjusted EPS of $3.21 – $3.63, compared to analyst estimates of $3.56.

Muse acknowledged the company’s worse-than-expected in-line second-quarter print and missed guidance.

The analyst noted that management provided very little information other than the fact that all segments came in roughly as expected.

So while the third-quarter guide of +4% quarter-on-quarter comes in a bit below the seasonal of +6%, the business continues to trend in the right direction, highlighting NXP Semiconductors’ strategic positioning and resiliency at a cyclical bottom, Muse said.

Outside of the obvious questions around cycle and end-market trends into the second half, Muse noted a key question into the earnings call would be around the extent of channel fill assumed within the guide the analyst had previewed a $50 million – $100 million tailwind in the quarter. However, given the guidance, this vision may be rosy.

For the calendar year 2024, it is now apparent flat year-on-year revenues are off the table. However, the typical seasonality of flat quarter-on-quarter would still enable the calendar year 2024 earnings power of $13.30, Muse said.

Assuming 7% top-line growth in calendar year 2025, this would support EPS of $15.00+ as per the analyst.

Muse noted that NXP Semiconductors remains the most attractive Analog name in the space, particularly given the well-above seasonality modeled for Texas Instruments Inc TXN, Analog Devices, Inc ADI, and Microchip Technology Inc MCHP.

The analyst noted that NXP Semiconductors’ valuation is relatively attractive at a cyclical bottom and that investors would be buyers on weakness.

Muse projects third-quarter revenue and EPS of $3.43 billion and $3.80.

Price Actions: NXPI shares traded lower by 9.41% at $256.90 at the last check Tuesday.