BofA Securities Deep Dive on NXP Semiconductors NV (NXPI) Yields 4 Positives
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BofA Securities analyst Vivek Arya reiterated a Buy rating and $240.00 price target on NXP Semiconductors NV (NASDAQ: NXPI) on the belief that the recent inclusion of the stock in the S&P 500 index could enhance investor awareness, as the company benefits from broad-based cyclical and secular growth drivers. The analyst highlighted 4 positives:
1) Autos: 47% of sales, 14% sales growth CAGR driven by robust cyclical recovery NXP leadership in digital clusters, 77 GHz radar, EV battery management systems, Domain controllers, Ultra Wideband, compute for safer/autonomous vehicles
2) Industrials/IoT: 22% of sales, 11% sales CAGR driven by broad microcontroller portfolio, growing WiFi attach, edge-processing
3) Comms Infra: 17% of sales, growing 4% annually as 5G GaN amplifiers offset declines in legacy networking
4) Mobile: 14% of sales, 9% CAGR on secure mobile wallet, Ultra wideband attach.
The analyst stated "we find valuation compelling at 18x PE and 21x EV/FCF our CY22E, which is 4-6 turns below diversified semi peers/SPX Industrials, despite faster growth and similar/better FCF margins. Growing FCF generation/returns, march towards ~$12/sh in potential CY23E pf-EPS, and closing valuation gap could help drive significant upside in our view."
Shares of NXP Semiconductors NV closed at $191.31 yesterday.
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