What to Expect From NXP Semiconductors' Next Quarterly Earnings Report

Barchart · 10/17 09:38

Valued at a market cap of $59.5 billion, NXP Semiconductors N.V. (NXPI) offers various semiconductor products, including microcontrollers, application processors, wireless connectivity solutions, radio frequency power amplifiers, and security controllers. These products are used in a wide range of applications, including automotive, wireless infrastructure, lighting, industrial, mobile, and computing. The Eindhoven, Netherlands-based company is expected to announce its fiscal Q3 earnings results on Monday, Nov. 4.

Ahead of this event, analysts expect the tech company to report a profit of $3.03 per share, down 8.5% from $3.31 per share in the year-ago quarter. The company has surpassed Wall Street's earnings estimates in three of the last four quarters while missing on another occasion.

Its adjusted earnings of $2.80 per share for the last quarter slightly missed the consensus estimate. The results were impacted by a decline in revenue from its automotive and communications infrastructure market.

For fiscal 2024, analysts expect NXPI to report an EPS of $11.97, down 5.8% from $12.70 in fiscal 2023. Nevertheless, EPS is expected to grow 12.2% year-over-year to $13.43 in fiscal 2025.

Shares of NXPI have gained 1.3% on a YTD basis, significantly underperforming both the S&P 500 Index's ($SPX) 22.5% rise and the Technology Select Sector SPDR Fund’s (XLK) 19.2% return over the same period.

NXPI’s slower-than-expected recovery from bloated inventory levels, stagnant automotive demand, and escalating tensions between the U.S. and China have contributed to its underperformance.

Moreover, shares of NXPI fell 7.6% after its Q2 earnings release on Jul. 22. The company reported revenues of $3.1 billion which met the consensus estimates but dropped 5% from a year ago. Its 7.5% annual decline in net income to $896 million, with a 7% year-over-year fall in non-GAAP operating income to $1.1 billion, might have dampened investor confidence.

On Oct. 15, Bloomberg reported that the Biden administration is discussing capping sales of advanced AI chips on a country-specific basis. The news negatively impacted investor sentiments, leading to a significant decline in chip stocks, including a 4.4% drop in NXPI’s stock.

Analysts' consensus view on NXP Semiconductors’ stock is moderately optimistic, with a "Moderate Buy" rating overall. Among 24 analysts covering the stock, 14 recommend a "Strong Buy," two suggest a "Moderate Buy," seven indicate a “Hold,” and one recommends a “Strong Sell.”

The average analyst price target for NXPI is $289.52, indicating a 24.4% potential upside from the current levels.

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On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.