Bank of America said that NXPI.US (NXPI.US)'s first-quarter results and performance guidance indicate that the automotive and industrial sectors of the semiconductor industry are experiencing a “soft landing.”
The Zhitong Finance App learned that the Bank of America said that NXP (NXPI.US)'s first-quarter results and performance guidelines indicate that the automotive and industrial sectors of the semiconductor industry are experiencing a “soft landing.”
As of press time, NXP Semiconductors shares were up 4.4% to $10.87 in pre-market trading.
Analyst Vivek Arya wrote in a report: “Notably, despite the negative factors facing the automotive industry, sales in the automotive sector fell 5% month-on-month and 1% year over year, meeting [management's] expectations, which indicates that NXP Semiconductors' 'soft landing' execution was effective.”
Arya reiterated his “buy” rating and target price of $300, and indicated that NXP's stock price was less than 20 times the expected bottom of earnings per share. In contrast, peers such as Texas Instruments (TXN.US), Adano (ADI.US), and Microchip Technology (MCHP.US) have price-earnings ratios between 38 and 41 times.
Other positive effects include strong guidance on gross margin, which is expected to be around 58.5% for the next quarter, higher than that of its counterpart Ansemi Semiconductors (ON.US), which set gross margin guidance at 45.2 percent, down 70 basis points. Despite concerns in the automotive industry, the company's automotive business revenue is still “in line with” expectations, while the company's management reiterated that the compound annual sales growth rate from 2021 to 2024 was 8% to 12%.