Has NXP Semiconductors’ stock hit a ceiling after the recent all-time high?

NXP Semiconductors (NASDAQ:NXPI) recently hit an all-time high of $282.22 on May 28th, marking a significant milestone for the company. However, the stock has since retraced, prompting chatter amongst investors regarding whether the rally will continue or the stock has peaked.

Recent earnings and valuation

In NXP’s Q1 2024 earnings report, the company revealed non-GAAP EPS of $3.24, beating expectations by $0.06. The company reported revenue of $3.13 billion, in line with estimates, showcasing its financial resiliency amidst a challenging market.

Despite sluggish sales in the broader chip industry, NXP’s diverse portfolio and strategic focus have helped maintain stability. The company’s automotive segment, although facing a cyclical downturn, still represents a significant growth opportunity.

Analysts remain cautiously optimistic about NXP’s valuation. While the stock trades at a discount compared to peers like Texas Instruments and Analog Devices, its forward P/E ratio of 19.4x suggests room for growth.

Analysts’ ratings and price targets

In recent sell-side analyst activity, Mizuho Securities upgraded NXP Semiconductors to a Buy rating and raised the price target to $325, citing the company’s strong positioning and potential for growth as inventory levels normalize.

Cantor Fitzgerald also raised its price target for NXPI to $325 from $290, highlighting the company as a favorite in the Analog sector. Analysts are optimistic about the recovery in fundamentals for the second half of 2024.

Bank of America echoed positive sentiments, pointing to a “soft landing” in NXP’s automotive and industrial segments. The firm noted that despite headwinds, NXP’s execution has been commendable, maintaining a Buy rating with a $300 price target.

According to analysts, NXP’s leadership in secure edge connectivity and automotive electronics positions it well for long-term growth. The company’s ongoing initiatives, including advancements in automotive radar and building management systems, highlight its innovative approach.

NXP Semiconductors has demonstrated robust performance and resilience, navigating industry challenges effectively. With positive analyst ratings and a strategic focus on high-growth areas, the company appears well-positioned for the future. Now, let’s see what the charts have to say about NXP’s stock future price trajectory.

Targeting the coveted $300 mark

NXP has been a long-term compounder, delivering over tenfold returns to investors since 2013 despite minor setbacks. After a sharp decline at the onset of the Covid pandemic in 2020, the stock rebounded dramatically, climbing from $80 to $240 in the following two years. However, 2022 and 2023 were lacklustre, with the stock failing to surpass its 2021 high.

NXPI chart by TradingView
In a strong rally starting last November, the stock rebounded from below $170 and reached a new all-time high of $282.22. On the daily charts, bullish momentum remains strong, suggesting the rally might not be over yet.

Bullish investors can consider accumulating the stock on pullbacks around $260, with a stop loss at $226. If the stock maintains its bullish momentum and stays above $238, it could soon surpass $300, where profits can be booked.

For traders anticipating a retracement, it’s advisable to wait for a daily close below $260 before initiating a short position. If NXP closes below $260, they can short the stock with a stop loss at $283. If the bearish trend continues, the stock may find support near $220, where profits can be booked.

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