NXP Semiconductors N.V. (NASDAQ:NXPI) maintaining its sales model has created an unexpected upside for 2024, analysts at the Bank of America (BoA) noted following the chipmaker's third quarter financial results.
The analysts highlighted that NXP maintained its 2021 to 2024 calendar year operating model which called for an 8% to 12% compound annual growth rate in sales compared to the 2021 calendar year revenue levels.
“At the midpoint of 10% compound annual growth rate, this implies about $14.7 billion in 2024 calendar year sales, well above our estimate of $14.2 billion and the consensus of $13.9 billion,” they wrote in a note to clients.
“Even the lower end of 8% suggests 2024 calendar year potential sales around $14 billion, above current consensus.”
The analysts maintained their ‘Buy’ rating on the stock, noting that NXP is a leading autos vendor with exposure to positive electrification, advanced driver assistance systems, and digitalization trends.
They also awarded it a price target of US$260. NXP shares were up 1.7% at about US$186 early on Tuesday afternoon.
“Stock valuation remains compelling in our view at 12 times the 2024 calendar year price-to-earnings ratio, especially considering solid free cash flow generation, with an about 20% trailing 12 months free cash flow margin well ahead of peers that are investing in capital intensive silicon carbide.”
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