NXP Semiconductors (NXPI) will "deliver a strong Q2" and issue an optimistic Q3 guidance resulting in 5% to 10% upgrade to the full year earnings per share consensus estimate, UBS Securities said in an earnings preview on Wednesday.
"The shares are up 9% in the past month, suggesting some of this is priced in, however, other analog peers have rallied up to 20% on similar hopes of a cyclical bounce," the firm added.
UBS noted that although results may be strong in the near term, uncertainty about the sustainability of the recovery remains due to factors like tariff-related pull-ins.
NXP Semiconductors' gross margin expansion is expected to be limited in 2025 as inventories are at record highs in terms of days which could constrain margin improvement, the firm said.
UBS raised its price target on the company's stock to $276 from $250 and reiterated buy rating.
Price: 231.71, Change: +10.50, Percent Change: +4.75
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