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Bernstein On US Semi Stocks: NXP A Top Pick, Broadcom Downgraded

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  • NXP Semiconductors NV (NASDAQ: NXPI) shares have lost 8 percent since October 8, shares of Broadcom Corporation (NASDAQ: BRCM) have gained 9 percent.
  • Bernstein’s Stacy A. Rasgon maintained an Outperform rating for NXP, while downgrading the rating for Broadcom from Outperform to Market-Perform.
  • NXP’s growth profile may be solid going ahead, while the Broadcom story seems to have “played out,” Rasgon stated.

NXP

The price target for the company is at $110. NXP's Q4 guidance, reflecting 15 percent a sequential decline, was “disappointed hugely” and the company’s shares tumbled almost 20 percent before bouncing back marginally, analyst Stacy Rasgon said.

“NXPI's end market commentary (outside of a few select pockets) indicated that overall customer end demand, while weak, remained reasonably stable. Rather, they attributed much of next quarter's shortfall to inventory correction in their distribution channel as they continued to build channel inventory in anticipation of a demand pickup that did not materialize,” Rasgon wrote.

The analyst added, however, that with expectations having been reset and the acquisition of Freescale Semiconductor Ltd (NYSE: FSL) being closed, the “set-up is attractive.”

She commented, “We believe NXPI can generate a sustainably solid growth profile given end market and competitive positioning, and that the FSL acquisition can drive additional upside as cost synergies are captured, with potentially more firepower embedded in the model over time.”

There is significant long-term upside, Rasgon said, naming NXP as the top pick in the Bernstein coverage.

Broadcom

The price target for the company is at $60. “Broadcom worked well in early 2015 on the back of the baseband shutdown and a renewed focus on shareholder value creation,” Rasgon mentioned.

She added that Broadcom’s shares gained after the company announced the deal with Avago Technologies Ltd (NASDAQ: AVGO). For spread remained relatively wide for a long time since the deal was announced. With regulatory approvals having been received, and the deal set to close by February 1, the spread has narrowed. This story “has played out,” Rasgon noted.

Latest Ratings for NXPI

DateFirmActionFromTo
Feb 2021CitigroupMaintainsNeutral
Feb 2021Deutsche BankMaintainsBuy
Feb 2021Loop CapitalMaintainsBuy

View More Analyst Ratings for NXPI
View the Latest Analyst Ratings

 

Related Articles (BRCM + NXPI)

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Posted-In: Bernstein Stacy A. RasgonAnalyst Color Long Ideas Downgrades Reiteration Analyst Ratings Trading Ideas

Latest Ratings

StockFirmActionPT
KRYSHC Wainwright & Co.Maintains103.0
OTRKRBC CapitalDowngrades32.0
EVHCanaccord GenuityMaintains24.0
BMRNCanaccord GenuityMaintains91.0
ONTFCanaccord GenuityInitiates Coverage On65.0
View the Latest Analytics Ratings
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