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NXP Semiconductors (NXPI) Up 4.04% on Its Probable Takeover

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NXP Semiconductors N.V. NXPI rose 4.04% after the U.S. market closed on Thursday Jun 9, 2022, following the news posted by the Asian Tech Press that Korea-based tech conglomerate Samsung Electronics is interested in acquiring the semiconductor company.

Since 2021, NXPI was rumoured to be on the list of Samsung’s potential acquisition of European chipmakers.

Notably, NXP Semiconductors has a market cap of $48.4 billion as of Jun 10. It is worth mentioning that NXPI is yet to confirm any potential deal.

Reportedly, Samsung intends to increase its exposure in the automotive chip market on the back of NXPI acquisition. Moreover, Samsung is bullish on the automotive semiconductor space owing to rising demand for chip content in cars amid the shift to electric vehicles and autonomous driving.

Further, the underlined acquisition will intensify competition for Taiwan Semiconductor Manufacturing Company, which is a major peer of Samsung, while one of its major customers is NXPI.

Following the news, Taiwan Semiconductor dipped 2.8%.

NXP Semiconductors N.V. Price and Consensus

NXP Semiconductors N.V. Price and Consensus
NXP Semiconductors N.V. Price and Consensus

NXP Semiconductors N.V. price-consensus-chart | NXP Semiconductors N.V. Quote

Strong Fundamentals

NXP Semiconductors has a strong automotive business. Its safety products for advanced driver assistance systems and other key categories of autonomous vehicles, namely connectivity, powertrain & vehicle dynamics, body & comfort as well as connected infotainment, have been gaining momentum.

Notably, NXPI generated $3.14 billion revenues in the first quarter 2022, of which 50% of the total revenues were generated from the automotive end market.

NXP Semiconductors’ strength in the automotive business continues to help it expand its presence in the automotive chip market.

This apart, NXPI is a leading designer and manufacturer of semiconductors. NXP Semiconductors offers high performance mixed signal and standard product solutions used in a wide range of applications, including automotive, wireless infrastructure, lighting, industrial, mobile, consumer and computing.

We note that the takeover by Samsung, if it materializes, will likely to help NXP Semiconductors grow its business efficiently, which in turn, will strengthen its financial performance.

Moreover, the latest plans of Samsung will likely help NXPI in gaining investors’ confidence in the days ahead. Shares of NXP Semiconductors have been down 19.2% in the year-to-date period compared with the Zacks Computer and Technology sector’s decline of 24.2%.

Zacks Rank & Stocks to Consider

Currently, NXP Semiconductors carries a Zacks Rank #3 (Hold). Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Avnet AVT, Aspen Technology AZPN and Amdocs DOX. While Avnet and Aspen technology sport a Zacks Rank #1 (Strong Buy), Amdocs carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Avnet has gained 17.4% in the year-to-date period. The long-term earnings growth rate for AVT is currently projected at 37.2%.

Aspen technology has returned 35.7% in the year-to-date period. The long-term earnings growth rate for AZPN is currently projected at 18.4%.

Amdocs has gained 14.2% in the year-to-date period. The long-term earnings growth rate for DOX is currently projected at 10%.


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