Sterne Agee CRT Sees the NXP (NXPI) Selloff as a Buying Opportunity

Sterne Agee CRT analyst, Douglas Freedman, believes the recent sell-off after Q3 earnings has created a great buying opportunity in NXP (NASDAQ: NXPI)

Should NXPI achieve full opex savings of $160M, or 80% of the total $200M annualized cost synergy target, by 4Q16, that could lead to an incremental $0.31 to 2016 consolidated EPS estimate of $5.01. Additionally, there could be incremental EPS of $0.92 in 2017 assuming 80% of the long term synergy target of $500M is achieved by reducing OpEx by 4Q17.

Despite the upside possibility, the analyst is not adjusting his estimates because Q1 revenue targets are at risk due to the uncertainties integrating FSL financials and the continued tepid macro demands.

In a full synergy scenario, they estimate the full cost saving benefits could drive the consolidated EPS to $8.78 in 2018, which implies a 9.3x P/E multiple for NXPI at current level, vs. peer group average of 16x.

The firm maintained their Buy rating and $107 price target.

For an analyst ratings summary and ratings history on NXP Semiconductors NV click here. For more ratings news on NXP Semiconductors NV click here.

Shares of NXP Semiconductors NV closed at $81.34 yesterday.

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