Bernstein: 'We're Going To Tell You' Why NXP Semiconductor Is A Buy

In a report published Tuesday, Bernstein analysts initiated coverage with an Outperform rating on

, with a price target of $133, despite the strong performance of its stock. Following an IPO at $14 in 2010, NXP Semiconductors' shares have stayed on a "strong upward trajectory." Over the past five years, the stock has returned more than seven-fold to investors, which translates to a compounded annual return of about 50 percent. The share price has been driven by "improvement in fundamentals, deleveraging and multiple expansion." In the report Bernstein noted, "…we believe the company can likely maintain their above-market revenue growth trajectory, due in large part to the structural benefits of automotive exposure and continued growth in mobile payments, with overall revenue diversification helping to at least partially mitigate downside from any one given market." The analysts expressed optimism regarding the upcoming acquisition of

, saying that the deal "makes sense strategically." The company would now have a "more complete product portfolio, cost synergy, and potential revenue synergy down the line." "With $9-$10 in earnings power for the combined company in 18 months, we believe the valuation appears compelling. And, we see earnings power support, with ~$6-7 possible even in the event of a severe correction," the analysts added.