Nomura analyst Romit Shah is out with a research report on NXP Semiconductors NV (NASDAQ:NXPI) in the midst of the chip maker’s underperformance in “every major comparable year-to-date,” from ON Semiconductor (-8%), Infineon (-11%), Broadcom (-15%), Texas Instruments (-24%), to Microchip (-29%).
Nonetheless, though the analyst recognizes revenue headwinds, he remains positive that “a fundamental case for owning NXPI continues to exist.” As such, the analyst reiterates a Buy rating on NXPI with a price target of $95, which represents a 15% increase from where the shares last closed.
While some of NXPI’s underperformance can be attributed to lower estimate revisions, Shah believes, “Bigger issues plaguing NXPI stock this year are the lack of a dividend and concerns over revenue growth,” with revenues projected to decline 7% year-over-year by third-quarter.
Ultimately, “Our belief is that this weak revenue growth will continue in Q4. While semi demand broadly speaking appears healthy, we believe NXPI continues to see weakness in digital networking, comm. processing and handsets. We believe automotive is tracking in line with seasonality, but investors perceive that slower growth is on the horizon due to peak SAAR units. Overall, we believe the company’s major end markets are not robust,” he concludes.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Romit Shah is ranked #255 out of 4,163 analysts. Shah has a 61% success rate and earns 9.5% in his annual returns. However, when recommending NXPI, Shah loses 3.9% in average profits on the stock.
TipRanks analytics demonstrate NXPI as a Strong Buy. Based on 11 analysts polled in the last 3 months, 9 rate a Buy on NXPI, while 2 maintain a Hold. The consensus price target stands at $106.18, marking a nearly 29% upside from where the stock is currently trading.