NXP Semiconductors Will Set a New High Soon: $300 in Sight

Key Points

• NXP Semiconductors struggled in Q1, but results and guidance suggest that its soft-landing approach works.
• Analysts are leading the market to new highs, which may be reached soon. 
• Cash flow and capital returns aid the outlook for higher share prices. 

NXP Semiconductors NASDAQ: NXPI is trending higher and on track to hit the $300 level. The company’s diversified business, position in the industrial chip market, and pivot back to growth are why. It will take a little more time for end-market normalization to turn into a business tailwind, but the signs are good that it is happening, and analysts are taking note. 

The first significant analyst revision following the Q1 release is from Bank of America. Analyst Vivek Arya highlights the company’s soft-landing management approach and takes note of the value. The stock is trading at only 18X its earnings outlook, which is expected to be the low point in the cycle. Peers such as Texas Instruments NASDAQ: TXN and Analog Devices NASDAQ: ADI trade closer to 40X, suggesting the value is deep. Mr. Arya maintained a Buy rating and a $300 price target, which is significant. The $300 target is the highest on Wall Street, issued by numerous firms, and 15% above the post-release price action. 

The analysts’ consensus price target reported by Marketbeat.com lags the price action now that results are in, but the trend leads the market. The consensus is up 28% compared to last year and 1.75% in the month ahead of the report, with 90% of the fresh targets above consensus. That trend is unlikely to change. 

Diversified Business Sustains Strength at NXP Semiconductors 

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