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On Tuesday, Stifel analysts maintained their Hold rating on NXP Semiconductors NV (NASDAQ:NXPI) shares, with a steady price target of $170.00. According to InvestingPro, NXP is a prominent player in the Semiconductors industry with a market capitalization of $46.7 billion, and has demonstrated profitability over the last twelve months. The firm’s analysis followed NXP’s report of in-line revenue for the March quarter, which totaled $2.84 billion, marking an 8.9% decrease from the previous quarter. Despite this decline, the company’s Non-GAAP (NG) earnings per share (EPS) showed a slight increase, coming in at $2.66, which is $0.06 and $0.03 higher than Stifel’s and the Street’s estimates, respectively. This performance was attributed to a marginal outperformance in the Mobile segment, while other End Markets aligned closely with expectations.
NXP’s Non-GAAP quarterly free cash flows (FCFs) rose to $426.0 million, representing 15% of revenues. However, the trailing twelve-month (TTM) FCFs saw a decline to $1.86 billion, down $199.0 million from the previous quarter. The company maintains strong financial health with a current ratio of 2.36, indicating liquid assets well exceed short-term obligations - one of several positive indicators identified by InvestingPro’s comprehensive analysis. Consequently, the NG TTM FCF leverage ratio increased to 4.17x, compared to 3.63x in the last quarter. The TTM EBITDA also decreased slightly to $4.89 billion from $5.06 billion in the previous quarter, and net leverage inched up to 1.58x from 1.49x. The increase in net debt was noted as shareholder returns reached 129% of FCFs, with $258 million in dividends and $303 million in buybacks.
Looking ahead, NXP provided a slightly higher June quarter outlook, with a revenue midpoint forecast of $2.90 billion, which would be a 2.0% sequential increase. Based on InvestingPro’s Fair Value analysis, the stock appears slightly undervalued at current levels. Subscribers can access the full Pro Research Report, which provides detailed insights into NXP’s valuation metrics, growth prospects, and financial health scores. This figure is also 1.6% above Stifel’s previous estimate and 1.4% higher than the Street’s expectations. The projected Non-GAAP EPS midpoint of $2.66 for the June quarter is up $0.12 from Stifel’s estimate and aligns with the consensus on the Street.
In other recent news, NXP Semiconductors disclosed its first-quarter earnings, slightly surpassing both Truist Securities’ and Wall Street’s forecasts, with second-quarter guidance aligning with expectations. The company’s revenue for the June quarter slightly exceeded consensus, though gross margins were weaker than anticipated, partly due to product mix. Meanwhile, Cantor Fitzgerald adjusted its price target for NXP to $225, citing challenges like cyclical market complexities and tariff-related uncertainties, while maintaining an Overweight rating. Stifel also revised its price target to $170, reflecting a conservative outlook on the company’s near-term growth potential, and maintained a Hold rating.
In a significant leadership change, CEO Kurt Sievers announced plans to retire by the end of 2025, with Rafael Sotomayor named as his successor. Sotomayor, currently Executive Vice President & General Manager of the secure connected edge business, will take on the role of President on April 28 and CEO on October 28. Analysts from Evercore ISI reiterated an Outperform rating, maintaining a $237 price target, expressing confidence in the company’s long-term prospects under new leadership. Despite challenges in the automotive and Industrial/IoT segments, NXP Semiconductors is navigating through a period marked by global economic challenges with a well-structured leadership transition.
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