Why the Time to Buy NXPI Stock is Now

NXP Semiconductors NXPI is a Dutch semiconductor company that specializes in designing and manufacturing microcontrollers, application processors, connectivity chips, RF power amplifiers, security controllers, communication processors, and sensors. NXP’s products are used in automotive, communication infrastructure, industrial, Internet of Things (IOT), and mobile applications, with operations in China, the U.S., Netherlands, Singapore, Japan, South Korea, Taiwan, Germany, and internationally. Established in 2006, NXPI is headquartered in Eindhoven, Netherlands. 

With a market cap of $69.7 billion, NXP Semiconductor’s stock has gained 20.7% this year, outpacing the broader equities market. The stock is trading near its newly set 52-week high of $280.77. 

NXPI also pays a quarterly dividend of $1.01 per share, yielding 1.46% at current levels. The company has raised its dividends for five consecutive years.

NXPI Reports Strong Earnings, with Solid Guidance

The semiconductor company reported its Q1 2024 results in late April, with revenue of $3.13 billion edging up just 0.2% YoY to meet consensus estimates. Earnings, on the other hand, outperformed market estimates, arriving $3.24 per share on an adjusted basis. 

NXPI ended the quarter with adjusted free cash flow of $627 million, and GAAP gross margin of 57%.

For the current Q2, management anticipates revenue in the band of $3.025 billion to $3.225 billion, indicating a 5% fall YoY, but in line with analysts' $3.12 billion estimate. 

Earnings are guided between $3.00 to $3.41 per share, also in line with analysts' non-GAAP estimate of $3.20 per share.

How Do Analysts Rate NXPI Stock?

Analysts have a consensus “Moderate Buy” rating on NXPI stock. With 25 analysts in coverage, 13 have a “Strong Buy” rating, 2 have a “Moderate Buy” rating, 9 maintain a “Hold” rating, and 1 backs a “Strong Sell” rating on the stock. 

The consensus price target of $277.42 would suggest that NXPI stock is perfectly priced at the moment, but the Street-high target of $370 indicates upside potential of 33.5% from current levels. 

Last week, Cantor Fitzgerald raised its target on NXPI from $290 to $325, signaling projected upside of 17.3% from current levels, while naming the company as their top pick among analog semiconductor plays. Analyst C.J. Muse and his team noted, “a mathematical certainty that the Analog cycle will bottom in the first half of 2024,” so the “playbook says time to buy Analog is now.” 

On the date of publication, Ruchi Gupta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.