Canaccord Genuity analyst Matthew Ramsay was out pounding the table on NXP Semiconductors NV (NASDAQ:NXPI), reiterating a Buy rating and raising the price target to $130 (from $110), which represents a potential upside of 34% from where the stock is currently trading.
Ramsay wrote, “We continue to believe NXP is fundamentally the best positioned mixed-signal semiconductor firm, regardless of market cap. We anticipate sustainable growth at least 50% above the sector over the next several years with integrated security providing multi-sector differentiation. As such, we believe NXP shares deserve at least a sector multiple, despite the debt load, as growth naturally deleverages the company long term. Incorporating the effects of the pending Freescale merger, our thesis changes little.”
“We believe the companies’ product portfolios are complementary and should allow for considerable costs synergies, pushing operating margin toward 30% once fully integrated. We conservatively model $9-10 in 2017 combined earnings power and significant free cash flow generation to quickly delever back to 2.0x debt/EBITDA, likely followed by the resumption of aggressive stock repurchases long term. We reiterate our BUY rating despite near-term sector headwinds and believe the recent stock pullback provides a buying opportunity.”, the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Matthew Ramsay has a total average return of 6.9% and a 75.0% success rate. Ramsay has a 23.7% average return when recommending NXPI, and is ranked #953 out of 3581 analysts.