Morgan Stanley upgrades NXP Semiconductors, sees 22% upside

Investing.com -- Morgan Stanley upgraded NXP Semiconductors NV (NASDAQ: NXPI) to "Overweight" from "Equal-weight" citing a favourable setup for growth in 2025 and structural business improvements that could drive margin expansion.

The firm raised its price target to $257, implying a 22% upside, and highlighted three key reasons for the upgrade: expectations that NXP will outperform the broader auto semiconductor market in 2025, ongoing improvements to gross margins, and signs that the microcontroller (MCU) market has bottomed.

Morgan Stanley (NYSE: MS) noted that NXP had underperformed in recent years due to conservative shipment strategies but is now well-positioned for growth as the automotive semiconductor market stabilizes. The firm also pointed to historical trends suggesting strong 12-month stock returns following an MCU cycle trough.

With a bullish outlook on NXP’s ability to expand gross margins through improved channel shipments and internal efficiencies, Morgan Stanley sees a 5-to-1 bull-bear skew in the stock’s favor.

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