Needham Boosts Price Target For Freescale Semiconductor Amid $40 Billion Merger Deal


In a research report published today, Needham analyst Rajvindra Gill reiterated a Buy rating on Freescale Semiconductor Ltd (NYSE:FSL) and raised the price target to $52 (from $45), following the news that the company has entered into a definitive agreement under which NXP Semiconductors NV (NASDAQ:NXPI) will merge with Freescale in a transaction which values the combined enterprise at just over $40 billion.

Gill stated, “While the premium could have been higher, we see further upside to FSL’s shares as investors realize the value that can be unlocked by this merger. Recall CY/CODE has increased 25% since one day after its merger announcement, and QRVO increased 69% in the six months after its deal was announced. We believe the combined entity could earn $9+ in CY16 excluding any revenue synergies.”

Furthermore, “We believe the combined entity could earn $9+ of EPS in CY16, fetch a 15x-17x P/E multiple. Based on these estimates, the deal’s conversion ratio and cash payment to shareholders, we believe $52 is a more appropriate value for FSL shares.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Rajvindra Gill has a total average return of 22.1% and a 63.7% success rate. Gill has a 37.0% average return when recommending FSL, and is ranked #40 out of 3492 analysts.

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