This report is the updated version of the report uploaded on 2 February 2023 at 2:19 PM PST.

NXP Semiconductors N.V.

NXPI Details

NXP Semiconductors N.V. (NASDAQ: NXPI) operates as a semiconductor company that provides mixed signal analog-digital and standard product solutions.

Financial Results

• The company posted full-year 2022 revenue of $13.21 Bn, reflecting an increase of 19% YoY, with revenue increasing throughout all of the focus end-markets. In Q4, revenue amounted to $3.31 Bn, reflecting a rise of 9% YoY, in line with the mid-point of the guidance range.
• In review, 2022 was a good year for the company, with robust execution resulting in record revenue, solid profit growth as well as healthy free cash flow generation.
• From the end-market perspective, the company’s automotive business performed very well.

Outlook

With respect to the guidance for the Q1 FY 2023, on the GAAP basis, total revenue is expected between $2,900 Mn- $3,100 Mn and gross profit is expected to be between $1,634 Mn- $1,780 Mn. 

Fundamental Valuation

P/E Multiple Based Relative Valuation

Key Risks

The company is exposed to the risks related to the COVID-19 pandemic. Also, the semiconductor industry is highly cyclical.

Stock Recommendation

The stock has been valued using Price/EPS multiple based relative valuation (on an illustrative basis) and the target price so arrived reflects a decline of low double-digit (in % terms). A slight discount has been applied to Price/EPS Multiple (NTM) (Peer Average) (approx) considering risks associated as well as the cyclical nature of the company. Also, significantly increased volatility as well as instability and unfavorable economic conditions could affect the business.

Resultantly, it is prudent to liquidate the stock at the current levels.

Hence, a ‘Sell’ rating has been provided on the stock at the current price of USD 197.50 (as of February 02, 2023, at 10:40 AM PST).   

Technical Overview:

Daily Price Chart

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for share price chart and stock valuation is based on February 2, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.