NXP Semiconductors (NXPI) Earnings Beat And Strong Guidance Put Valuation Back In Focus
NXP Semiconductors (NasdaqGS:NXPI) drew fresh attention after reporting quarterly sales of US$3.50b and net income of US$767m, alongside guidance that points to higher expected revenue and earnings in the coming quarter.
See our latest analysis for NXP Semiconductors.
Despite the strong Q2 results and higher guidance, NXP Semiconductors’ share price has pulled back, with the stock down 17.92% on a 30 day share price basis and 22.38% over 90 days, while the 1 year total shareholder return of 11.11% suggests longer term holders have still seen gains.
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After a sharp pullback and a wide gap between NXP Semiconductors’ current US$229.16 share price and analyst and intrinsic estimates, the real question is where fair value sits across that spread.
Most Popular Narrative: 27% Undervalued
NXP Semiconductors’ most followed valuation narrative points to a fair value of about $314 per share, versus the last close of $229.16. This creates a sizeable gap that hinges on a specific earnings and revenue path.
The analysts have a consensus price target of $314.1 for NXP Semiconductors based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $400.0, and the most bearish reporting a price target of just $200.0.
Want to see what is baked into that valuation gap? The narrative leans on faster sales, higher margins and a profit multiple that assumes solid execution.
Result: Fair Value of $314 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, this NXP Semiconductors narrative could be disrupted if competition from China pressures margins or if recent acquisitions raise costs without delivering the expected earnings support.
Find out about the key risks to this NXP Semiconductors narrative.
Next Steps
With mixed signals around NXP Semiconductors and its valuation, it makes sense to move quickly and test the story against the underlying numbers yourself. To weigh up both the concerns and the potential upside in one place, start with the 5 key rewards and 1 important warning sign
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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