'A Semiconductor Powerhouse Has Emerged,' Needham Says. Wonder Who It Is?

In a report issued Friday morning, Needham analysts Rajvindra S. Gill and Joshua Buchalter initiated coverage on NXP Semiconductors NV

, characterizing it as a recently emerged "semiconductor powerhouse." The firm issued a Strong Buy rating and a $140 price target on the stock, which is up about 5.6 percent –to approximately $104.10- on Friday. According to the report, what makes NXP a powerhouse within its industry is its recent merger with Freescale Semiconductor Ltd

– Strong Buy, $52 price target. This fusion makes the new company: 1) The fourth largest semiconductor company, excluding memory players 2) The number one supplier in auto semiconductors 3) The leading Global MCU provider 4) A dominant player in the mobile payments industry 5) A top Internet-of-Things supplier Needham sees "significant leverage in the model" as they "expect the combined entity to utilize its cash flow power to aggressively delever, resulting in robust earnings." The firm believes the combined company could generate $2.3 billion of free cash flow, which would enable it to pay down about $400 million in debt each quarter.