Should you buy NXP Semiconductors stock after its Q3 report?

on Oct 31, 2022
  • NXP Semiconductors reports a strong Q3 but disappoints on future guidance.
  • Jim Lebenthal discussed the earnings report on CNBC Closing Bell: Overtime.
  • NXP Semiconductors stock is currently down more than 35% for the year.

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NXP Semiconductors NV (NASDAQ: NXPI) reported market-beating results for its fiscal third quarter late on Monday. Shares are still “down” slightly after the bell.

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Is NXP Semiconductors stock a buy?

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Investors are responding to the future guidance that came in a bit shy of the Street estimates.

NXP has been a disaster for shareholders this year on fears of looming recession. Still, Cerity Partners’ Jim Lebenthal continues to recommend buying this stock.  

What if we don’t have the recession? Because then NXP Semiconductors at ten times earnings with a projected multi-year long-term growth of 16% in earnings is a pretty tasty treat to snap up at this price.

Last week, Invezz reported the U.S. economy to have returned to growth in the third quarter of 2022. Estimates for the current quarter are broadly positive as well.

For the year, the NXP Semiconductors stock is currently down more than 35% even though the automotive (its largest segment) sales remained encouraging. Still, Lebenthal said on CNBC’s “Closing Bell”:

The actual operational performance of the company is great. And eventually, the share price does catch up with the operational performance. You just got to be patient.

Key takeaways from NXP Semiconductors’ Q3 report

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  • Net income printed at $738 million versus year-ago $519 million
  • Per-share earnings climbed significantly from $1.91 to $2.79
  • Adjusted EPS was $4.98 as per the earnings press release
  • Revenue went up 21% on a year-over-year basis to $3.45 billion
  • Consensus was $3.66 of adjusted EPS on $3.43 billion in revenue

For the current financial quarter, NXP expects its revenue to fall between $3.20 billion and $3.40 billion versus the analysts at $3.41 billion.

Wall Street currently has a consensus “overweight” rating on the NXP Semiconductors stock. The average price target on it is $184 – about a 27% upside from here.


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