NXP Semiconductors NXPI recently unveiled the Trimension NCJ29Dx family. The product enables hands-free secure car access with precise and secure real-time localization as required by leading premium car manufacturers through smart mobile devices and other Ultra-Wideband (UWB)-based features.
The NCJ29Dx family, touted to be the industry’s broadest UWB portfolio, will lay the technology base for Audi’s advanced new UWB platform.
NXPI’s Trimension UWB platform enables OEMs to deliver new features for drivers, facilitating secure and easy hands-free access to their cars, as well as supporting additional use cases like automated electric vehicle (EV) charging and more.
It offers enhanced levels of protection against car theft through relay attacks and includes on-chip support for a wide range of cryptographic operations.
NXP Semiconductors N.V. Price and Consensus
NXP Semiconductors N.V. price-consensus-chart | NXP Semiconductors N.V. Quote
Portfolio Expansion to Aid NXPI’s Prospects
NXPI is gaining traction across its end markets with its recent product launches.
The launch of the S32J family of high-performance safe and secure Ethernet switches and network controllers is expected to boost NXPI’s prospects.
NXPI marks a significant achievement by unveiling the Trimension SR250, the industry’s maiden single-chip solution that combines on-chip processing capabilities with both short-range UWB radar and secure ranging.
It facilitates a variety of new user experiences based on location, presence, or motion detection across consumer or industrial IoT applications.
Strong Partner Base Bodes Well for NXPI
NXP Semiconductors teamed up with ZF Friedrichshafen AG for the next-generation SiC-based traction inverter solutions for EVs.
NXPI's GD316x high-voltage isolated gate drivers’ family is integrated into ZF’s next-generation 800-V SiC-based traction inverter solutions for EVs to maximize the safety, efficiency, range and performance of EVs.
The formation of a 60:40 manufacturing joint venture between Vanguard International Semiconductor and NXPI is a noteworthy development. TSMC is Vanguard’s largest shareholder with whom NXPI already has partnerships in Europe and Singapore.
This new joint venture, VisionPower Semiconductor Manufacturing Company, will develop a 300 mm fab in Singapore, which will produce 55,000 wafers per month in phase 1.
NXP Semiconductors is expected to invest $2.8 billion between 2024 and 2028, with the peak investment period being in 2025. This investment is expected to help NXPI generate $4 billion of incremental annual revenues.
Inventory Corrections & Weak Communication to Hurt NXPI
Despite NXP Semiconductors’ innovative product launches, it is facing significant challenges in distribution channel inventory. During the third quarter, NXPI anticipates 1.8 months of distribution channel inventory compared with 1.7 months of distribution in the previous quarter.
As a result, the second half will grow over the first half with the potential outcome for 2024 to be a modest annual revenue decline in the low single-digit range. This can be attributed to the continued weakness in its core industrial markets in Europe and the Americas.
Moreover, Communication Infrastructure is expected to decline in the mid-20% range on a year-over-year basis and mid-single digit sequentially.
NXPI Suffers From Stiff Competition
NXP Semiconductors is facing stiff competition from leading players in the semiconductor space, including Analog Devices ADI, Semtech SMTC and MACOM Technology Solutions MTSI. It also underperformed its Semiconductor - Analog and Mixed industry.
On a year-to-date (YTD) basis, NXPI shares have risen 2.8%, underperforming ADI, SMTC and MTSI’s return of 14.2%, 104.4% and 24.3%, respectively. The industry appreciated 5% YTD.
NXPI’s Q3 Guidance Not So Promising
For the third quarter of 2024, NXP Semiconductors expects revenues between $3.15 billion and $3.35 billion, indicating a year-over-year decline of 5% at the midpoint but an increase of 4% sequentially.
The Zacks Consensus Estimate for third-quarter 2024 revenues is pegged at $3.25 billion, suggesting a year-over-year decline of 5.3%.
NXPI expects the non-GAAP gross margin to be 58.5% (+/-50 bps). The non-GAAP operating margin is anticipated to be 35.1% at the midpoint.
NXP Semiconductors anticipates non-GAAP earnings between $3.21 per share and $3.63 per share. The consensus mark for earnings is pegged at $3.43 per share, unchanged over the past 60 days, suggesting a 7.3% year-over-year decline.
Out of the trailing four quarters, NXPI’s earnings beat the Zacks Consensus Estimate thrice and matched once, with the average surprise being 1.79%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Zacks Rank and Valuation
NXP Semiconductors stock is not cheap, as suggested by a Value Score of D.
NXPI carries a Zacks Rank #4 (Sell), which implies that investors should stay away from the stock at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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