Goldman Boosts Price Target on NXP Semiconductors

 | Aug 09, 2018 | 6:20 PM EDT
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qcom

 
 
Things could be looking up for NXP Semiconductors (NXPI)  .
 
Just weeks after NXP's planned merger with Qualcomm (QCOM)  was scuttled, Goldman Sachs analysts reinstituted coverage of the recently beleaguered stock, issuing a price target of $106 for NXP, which closed just below $96 on Thursday.
 
The stock has traded as low as $90 in the past two months after reaching a peak of $125.93 in February in advance of Qualcomm's long-anticipated $44 billion merger with the company.
 
Hedge fund managers heavily invested in the stock soured on NXP after Qualcomm scuttled the deal when Chinese regulators did not approve the merger as expected, executives said in a July 25 earnings call.
 
Monaco-based Tyrus Capital held more than $500 million in shares of NXP, according to an SEC 13F filing in June 2018. Elliott Management, which had estimated NPX's value last year at $135 a share, trimmed its holdings in NXP from 7.1% to 5.5% this summer, according to FactSet.
 
"Continued uncertainty overhanging such a large acquisition introduces heightened risk," Steve Mollenkopf, chief executive officer of Qualcomm said about the scuttled merger in the July 25 call. "We weighed that risk against the likelihood of a change in the current geopolitical environment, which we didn't believe was a high probability outcome in the near future."
 
Shares of NXP moved slightly downward in Thursday trading to close at $95.68.
 
ActionAlertsPLUS.com research analyst Zev Fima said the recent pullback in NXP's price could leave the stock undervalued. The company is a leader in producing microchips for automobiles, Fima said, adding that nothing has fundamentally changed except the merger being called off.
 
Fima said the stock has rebounded twice from a low of around $90 since May. That shows that shares could return to significantly higher levels.
 
"There is a bad taste in people's mouths from people who expected Qualcomm to pay $127.50 for the stock," Fima said. "NXP (still) has a lot of tech in cars and other businesses to be excited about."

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