Earlier this afternoon, WSJ has cited that QUALCOMM, Inc. (NASDAQ:QCOM) is in discussions to acquire NXP Semiconductors NV (NASDAQ:NXPI) in a deal that could value the Netherlands-based chip maker at over $30 billion. In reaction to the news, NXPI shares have soared ~16%, while QCOM shares have risen ~6%.
Deutsche Bank top analyst Ross Seymore noted, “The average valuation for semiconductor deals since 2014 has been at a ~25x P/E, ~18x EV/EBITDA and average price premium to prior close of ~30%. While we have no incremental knowledge about the validity of these reports, should NXP be acquired at the equivalent of these multiples, it would imply a share price range of $140-$160 (~$50-55b market cap) with the typical ~30% premium to the prior close implying a much lower $110.”
Seymore rates NXPI a Buy with a price target of $110, which represents a potential upside of 14% from where the stock is currently trading.
Investment firm Mizuho also responded to the news, upgrading QCOM shares to Outperform from Neutral, with a price target of $75.00.
Mizuho’s lead analyst Vijay Rakesh commented, “We believe a deal here makes significant strategic and financial sense. As OEMs look to diversify away from a maturing handset market, we are seeing the leaders AVGO and QCOM try to actively diversify. QCOM dominates automotive telematics and we believe the potential acquisition of NXPI will give it in-cockpit market share, powertrain, safety, and an automotive processor portfolio from FSL that creates the first end-to-end semiconductor auto supplier of the future.”
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, analysts Ross Seymore and Vijay Rakesh have a yearly average return of 23.5% and 27.4% respectively. Seymore has a success rate of 77.5% and is ranked #9 out of 4181 analysts, while Rakesh has a success rate of 74% and is ranked #13.