Decline in Secure Interfaces and Power Business Hits NXP Semiconductors' (NXPI) Revenue; Needham & Company Cuts Price Target to $100
Needham & Company maintained a Strong Buy rating on NXP Semiconductors NV (NASDAQ: NXPI), and cut the price target to $100.00 (from $140.00), following the company's 3Q15 earnings report. Revenue of $1.52Bn was slightly below our in-line $1.55Bn estimate, largely due to a decline in the Secure Interfaces and Power business. NXPI reported EPS of $1.57, beating consensus by 7c.
Analyst Rajvindra Gill commented, "We are lowering our PT to $100 vs $140 following a solid 3Q print but a significantly lower 4Q outlook. NXPI cited broad weakness across multiple end markets, which resulted in lower than expected sell-through and increase channel inventory. We believe NXP overshipped in the current qtr, and as we discussed during our Asia trip, end demand has slowed considerably on weakening Chinese economy. As a result, over the next 1-2 qrts, channel inventory levels will have to be purged at its distributors. Despite the NT headwinds, we believe the combination with FSL will generate significant earnings power ($9-10, op margin 30%) and it has several product cycle stories (IoT, NFC, connected autos) in front of it."
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Shares of NXP Semiconductors NV closed at $90.92 yesterday.