The semiconductor industry remains under pressure, as the demand/supply relationship is not equalizing, with the demand outstripping the current supply. However, not all market players are facing the heat, and one such company is NXP Semiconductors (NXPI).
In the latest quarterly analyst call, NXP Semiconductors’ CEO, Kurt Sievers, said, “While the supply environment will remain challenging in the near term we have taken actions to increase supply which underpin our confidence to drive very robust growth for the remainder of 2021, as well as into 2022.” (See NXP Semiconductors stock charts on TipRanks)
Notably, NXP Semiconductors recently delivered stellar Q2 numbers wherein its top-line surged about 43%. Meanwhile, its adjusted operating income showed stark improvement on a year-over-year basis.
In response to NXP Semiconductors’ Q2 results, Rajvindra Gill of Needham said that the company has secured “additional wafer capacity from its foundry partners along with capacity from its internal fabs.” Further, he expects “NXPI to land capacity with additional partners.”
The analyst sees the “the inventory correction that affected the semi cycle since October 2018” to be almost over and believes “that we are approaching a bottom.”
Notably, Gill has a Buy rating on NXP Semiconductors. Moreover, he increased the price target to $260 (23.5% upside potential) from $240, expecting demand to rebound to the pre-pandemic levels. Gill’s bullish outlook is centered around NXP Semiconductors’ solid positioning in the automotive and communications infrastructure space.
The analyst expects NXPI to deliver strong earnings growth as additional supply comes online. Furthermore, improving gross margins and lower outstanding share count are likely to drive its EPS. The improving fundamentals led Gill to revise his 2021 and 2022 EPS estimates higher.
On TipRanks, NXPI has an analyst rating consensus of Moderate Buy, based on 5 Buys and 2 Holds. The average NXP Semiconductors price target is $232.40, implying approximately 10.4% upside potential to current levels.
Furthermore, NXP Semiconductor stock scores a “Perfect 10” on TipRanks Smart Score system.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
