NXP Semiconductors (NXPI) PT Raised to $117.50 at Morgan Stanley on Potential for Higher Qualcomm (QCOM) Bid

August 7, 2017 8:56 AM EDT
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Price: $176.91 -2.82%

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    18 Buy, 15 Hold, 0 Sell

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Morgan Stanley analyst Craig Hettenbach raised his price target on NXP Semiconductors NV (NASDAQ: NXPI) to $117.50 (from $110.00) while maintaining a Equalweight rating as momentum builds for a higher Qualcomm (NASDAQ: QCOM) takeover price.

"We think NXPI shareholders have the upper hand for attempting to drive a higher takeout price," Hettenbach commented. "At the same time, a higher bid would be inconsequential to Qualcomm's balance sheet and deal accretion math. As such, this could still be a win/win for all parties involved."

Hettenbach said an offer price of $120 per share would only increase net leverage by 0.35X and reduce EPS by 2-3%, both inconsequential in their view relative to the strategic thrust of the deal.

"We have a hard time believing that rather than raise the price and get a deal done with ever so slightly less accretion of ~35%, Qualcomm will walk away and risk 0% accretion and the chance to change its narrative toward a leading automotive supplier while reducing its dependence on the mature smartphone market," the analyst added.

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