Canaccord Genuity analyst Matthew Ramsay weighed in today with a few insights on NXP Semiconductors NV (NASDAQ:NXPI), after the company announced the sale of its RF Power business to JAC Capital for $1.8 billion. Under the agreement, JAC Capital will purchase 100% of the business consisting of 2,000 employees including the management team as well as all associated IP and manufacturing operations in the Philippines.

Ramsay wrote, “We believe NXP can quickly de-lever back to 2.0x debt/EBITDA target model, using cash received from sale of RF Power business to kickstart the process. We estimate the influx of $1.8B in cash should lower the post-merger debt/EBITDA ratio from near 3.0x to roughly 2.4x and returning to the target 2.0x ratio could happen much more quickly than management’s initial six-quarter target. While the sale of the RF Power business will be modestly dilutive to our top- and bottom-line estimates, we believe the quicker resumption of share repurchases could lessen the EPS impact and we remain comfortable with our $9-10 2017 post-deal non-GAAP EPS estimate.”

Bottom line: “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. Incorporating the effects of the pending Freescale merger, our thesis changes little.”

The analyst reiterated a Buy rating on NXP Semiconductors shares, with a price target of $130, which implies an upside of 16% from current levels.


According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Matthew Ramsay has a total average return of 13.3% and a 81.5% success rate. Ramsay has a 39.5% average return when recommending NXPI, and is ranked #371 out of 3610 analysts.