Morgan Stanley Remains Positive on NXP Semiconductors (NXPI) Amid Likely iPhone NFC

Morgan Stanley remains bullish on NXP Semiconductors (NASDAQ: NXPI) in the Apple (Nasdaq: AAPL) iPhone event despite the fact that an NFC being worst kept secret by now.

"Importantly, despite increasing positive sentiment in NXPI related to the opportunity at Apple, our estimates and the Street still don't fully reflect the benefit from Apple’s partnership for NXPI’s ID segment. Specifically, we model the company’s emerging ID segment to increase $143mn y/y in FY15 as compared to our base case estimate of $250mn for the Apple opportunity," analyst Craig Hettenbach said.

Further, with NXPI trading at 13.5x the firm's CY15e EPSboth estimates and the valuation multiple are firmly biased to the upside.

Hettenbach also said while Apple is the catalyst, there are implications that go well beyond this important OEM. "For NXP, we expect rising NFC penetration in smartphone and other consumer electronics devices to drive the company's served available market (SAM) in NFC to grow at a 40% CAGR over the next 4 years to ~$1.7bn. As a knock-on effect of Apple’s adoption of NFC, we believe other smartphone OEMs could follow suit in incorporating the technology leading to a steeper ramp in NFC penetration as compared to our estimate of ~65% by 2017 from less than 30% in 2013."

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