Needham’s Gill explains why NXPI slid 2.0% despite strong Q3 results

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NXP Semiconductors N.V. (NASDAQ: NXPI) slid about 2.0% in after-hours trading on Monday despite reporting market-beating results for its fiscal third quarter.

Rajvindra Gill’s remarks on CNBC’s ‘Closing Report’

On CNBC’s “Closing Report”, Needham’s Rajvindra Gill said the stock was down in extended trading because of the higher expectations.  

NXP had a very good quarter, good guidance; strong automotive numbers, strong industrial numbers. The stock is down about 2.0% because On Semiconductor Corp, its peer, had a very strong beat and raise quarter earlier today; the stock was up about 15%. So, there might have been expectations that the beat would be bigger for NXPI.

Gill expects the ongoing chip shortage to last for most of 2022 but still rates NXPI at “buy” with a price target of $260 that represents an about 30% upside from here.

Q3 financial performance

NXP said its net income printed at $519 million that translates to $1.91 a share. On an adjusted basis, its per-share net income came in at $2.82.

The semiconductor manufacturer generated $2.86 billion in revenue that represents a 26% growth on a year-over-year basis. In comparison, analysts had called for $2.74 of adjusted EPS on $2.85 billion in revenue.

Future outlook and other notable figures

For the fiscal fourth quarter, NXP forecasts up to $3.08 billion in revenue. The Street was around $2.9 billion. The semiconductor firm expects its GAAP operating margin to climb to 26.2% in the current quarter versus 24.9% in Q3.  

Other notable figures in the earnings press release include $924 million in cash flow from operations and $200 million in net CAPEX investments in the third quarter.

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