Investing.com -- Citi downgraded NXP Semiconductors to Neutral from Buy and lowered its price target to $260 from $370, saying it expects weaker earnings estimate revisions than peers heading into 2027. The company’s shares fell 2.7% in premarket trading Thursday.

Analyst Atif Malik said Citi believes the analog upturn is "more than halfway through," and that further upside for analog chipmakers is increasingly driven by data center buildouts. NXP has limited exposure there, at 3% to 4% of sales, the lowest among peers, while 56% of revenue is tied to the automotive market, where demand remains subdued.

Citi lowered its 2027 and 2028 earnings estimates to $16.30 and $18.64 per share from $16.61 and $21, now in line with the Street, on weaker auto and industrial assumptions. Its estimates still assume about 12% annual auto content growth above vehicle production from 2026 to 2028.

The new target applies a 14 times price-to-earnings multiple to 2028 earnings, down from 17 times. That is in line with NXP’s five-year average and reflects lower data center exposure relative to peers.

The downgrade is part of a more selective stance on chip stocks after the SOX semiconductor index rebounded 24% from its summer correction. Citi also downgraded Universal Display to Sell, with a $71 target, citing smartphone market weakness next year, and moved Nova to Neutral, with a $415 target, saying its risk-reward looks balanced.

Citi named AMD, Texas Instruments, Lam Research, Teradyne and Synopsys as its top buy-rated picks. The bank expects the largest sales estimate revisions in compute chips, particularly networking and CPU-exposed names, followed by analog and semiconductor equipment.

Original Article