‘Time to Pull the Plug’: Citi Cuts NXP Semiconductors to Neutral, Shares Dive
2022.04.19 16:16
‘Time to Pull the Plug’: Citi Cuts NXP Semiconductors (NXPI) to Neutral, Shares Dive
Citi analyst Christopher Danely downgraded NXP Semiconductors NV (NASDAQ:NXPI) to Neutral from Buy as he believes that the margin expansion thesis has played out.
The analyst sees margin close to peaking, hence, it is unlikely that NXPI shares can outperform “until a correction resets the bar.”
“Our Buy thesis back in February 2021 was based on an anticipation of superior margin/EPS upside and strength from the automotive end market,” said Danely before adding that he still expects auto strength to continue for a while.
“Now that NXP margins have expanded, there is only 50 basis points left to peak gross margins and 100 basis points left to peak operating margins. We view other stocks such as ADI, ON, GFS, and Micron with more margin expansion,” he added.
The lowered price target – $190.00 per share from $240.00 – reflects lowered target multiple.
NXPI stock price is down 2.4% in pre-open today.
By Senad Karaahmetovic
