NXP Semiconductor (NASDAQ:NXPI) shares rose around 3% in early trading after the Dutch semiconductor designer and manufacturer reported third-quarter results and issued guidance late on Monday, leading Wall Street to breath a collective sigh of relief.
Bernstein analyst Stacy Rasgon, who has a market perform rating and a $210 price target on NXP Semiconductors (NXPI), said the print was “decent” in an “in an increasingly nervous environment.”
“We would note though that revenues beat by a smaller amount vs prior quarters, and the language in the release was a bit less encouraging (last quarter they noted ‘confidence,’ while they used ‘cautiously optimistic’ to describe Q1,” Rasgon wrote in an investor note.
“This time they merely observed that they would likely have flattish revenues in a challenging and cyclical market environment this year). It will be interesting to see how the stock trades through it, as some peers who have cut more aggressively have actually tended to benefit during this season.”
Looking ahead, NXP (NXPI) expects fourth-quarter sales to be between $3.3B and $3.55B, with the mid-point about in-line with the $3.42B estimate.
Adjusted earnings are forecast to be between $2.71 and $3.13 per share, with the mid-point slightly below the $2.95 per share estimate. Adjusted operating income is forecast to be between $1.14B and $1.27B, with the estimate of $1.21B. Adjusted gross margins are forecast to be between 58% and 59%, with the mid-point above the 58.3% estimate.
For the period ending October 1, NXP Semiconductors (NXPI) earned an adjusted $3.70 per share on $3.43B in revenue. Analysts had expected adjusted earnings of $3.59 per share on $3.41B in revenue. Adjusted free cash flow for the period came in at $788M.
Wells Fargo analyst Gary Mobley, who has an overweight rating and $182 price target on NXP (NXPI), said the in-line results are likely to be viewed “quite positively,” given that its analog and microcontroller peers such as Texas Instruments (TXN), Analog Devices (ADI) and ON Semiconductor (ON) have lowered their outlooks.
Texas Instruments (TXN), Analog Devices (ADI) and ON Semiconductor (ON) all slipped in early trading on Tuesday.
Truist Securities analyst William Stein said while the company is not immune to the issues in the industrial and automotive spaces, it has performed better than its peers.
“Remarkably, NXPI’s Q3 result is the third sequential quarter of fractional negative y/y growth (‘touch…’), and the Q4 guidance, while sequentially down and 2% below seasonal, implies a return to growth (…’& go’),” Stein wrote in an investor note. “If management’s commentary on the call … doesn’t highlight significant further erosion beyond Q4, NXPI will prove to have navigated the current cycle remarkably well in our view.”
Stein attributed the strong performance to NXP’s end market, customer exposure and “other factors,” including new technologies and products the company developed via its R&D spending and recent acquisitions.