This semiconductor manufacturer beat its earnings estimate by seven cents and brokerage firm Jefferies recently raised its price target to $72.
NXP Semiconductors NV (NXPI)
from Blue Chip Growth
During the first weeks in April, the market wasn’t kind to momentum stocks. So it really speaks to the quality of a stock when it’s able to buck the selling pressures. And that’s exactly what we saw with NXP Semiconductors NV (NXPI). As you can tell by its name, NXP is a chip maker. With $4.82 billion in revenue brought in last year, it ranks in the top 20 semiconductor companies by sales.
Sixty years ago (which for the tech sector is practically eons ago), Philips Board was founded in the Netherlands. Over the years, what started as a modest semiconductor operation has grown into a multi-billion dollar business with operations in 25 countries. Along the way Philips also changed its name to NXP, standing for “next experience.” And the company has lived up to its new name, providing next generation chips used in everything from cell phones to cars to ID cards to wireless infrastructure. Where NXP sets itself apart is its focus on energy efficiency, authentication technology and data security.
Over the years it has built up a reputation that has attracted high profile OEM (original equipment manufacturer) customers like Apple, Bosch, Gemalto, Huawei, Nokia and Samsung. About 40% of NXP’s business is in China while approximately 7% comes from the United States. It has the distinction of being the first “true” automotive semiconductor maker in China, and it has historically been much more successful in entering this market than many other chip makers and software companies. The company’s revenue base is well-diversified, which is a definite plus.
This all helps to explain why the stock has continued to hold steady through the recent choppiness and why there’s further upside from here. Looking ahead to its upcoming earnings announcement on April 23, the analyst community is calling for 13.6% annual sales growth and 26.4% earnings growth. The company has posted four consecutive quarterly earnings surprises and the analyst community has revised their consensus earnings estimate 9.4% higher in the past three months, so I expect another big earnings surprise. Before then, I recommend you pick up shares of this Moderately Aggressive stock under $62.
Louis Navellier, Blue Chip Growth, www.bluechipgrowth.com, 800-718-8289, May 2014