NXP Semiconductors (NXPI) is up over 5% after beating Q1 EPS estimates, reporting roughly in-line revenue and (perhaps most importantly) guiding for Q2 revenue of $2.15 billion to $2.25 billion, largely above a $2.154 billion consensus. That guidance still implies revenue will be down 2% to 6% annually, but that's better than what several peers have forecast for Q2, and certainly a lot better than what was feared back when NXP's shares tumbled into the 70s in late 2018.
Much like peers Texas Instruments (TXN) and Cypress Semiconductor (CY) did last week, NXP declined to predict a full-blown, second-half recovery for the chip industry, and added that soft Chinese demand remains a headwind, particularly for industrial chip sales. However, the company did say it thinks second-half demand will "likely" be stronger than its first-half demand, thanks in part to "specific design wins" that will boost its top line. These wins include ones for battery management systems within electric cars, ADAS radar systems, NFC radios within smartphones, advanced microcontrollers (MCU) for IoT devices and RF products for mobile base stations (including 5G base stations).
In a nutshell, NXP is benefiting not just from better-than-feared industry demand amid a cyclical downturn, but from good execution and healthy exposure (thanks to both M&A and smart R&D investments) to some fast-growing automotive, IoT and mobile chip markets.
NXP isn't as cheap as it was a few months ago, but similar to some other MCU and analog/mixed-signal chip suppliers, it's still not expensive, even after accounting for about $5 billion in net debt on the company's balance sheet. Shares currently go for less than 14 times a 2019 EPS consensus of $7.55, and less than 12 times a 2020 EPS consensus of $8.97.
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