On Tuesday, Wolfe Research adjusted its outlook on NXP Semiconductors NV (NASDAQ: NASDAQ:NXPI), reducing the price target from the previous $315.00 to $290.00. Despite this change, the firm maintains an Outperform rating on the company's shares. The new price target is based on approximately 16 times the analyst's bull case scenario earnings per share (EPS) of around $18 for the calendar year 2025 (CY25), which is slightly higher than NXP's average multiple of about 15 times over the last five years.
The semiconductor company, two years into an industry downturn, finds itself in a similar position to the previous year. Customers continue to reduce inventory levels, and end demand is still on the decline. Wolfe Research's estimates reflect a CY25 EPS of $13.37, indicating little change compared to the calendar year 2024 (CY24). According to the firm, this number does not fully represent the true earnings power of NXP Semiconductors, as it still includes the effects of cyclical headwinds.
Wolfe Research suggests that the current stock price, trading at just over 16 times the CY25 EPS estimate, does not fully account for NXP's potential, especially given the opportunity for the company to present its case at the upcoming analyst day this Thursday. The firm views NXP Semiconductors as their top analog stock pick in anticipation of a cyclical rebound after a two-year period of inventory corrections, signaling confidence in the company's prospects despite the current market challenges.
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