NEW YORK (TheStreet) -- Shares of NXP Semiconductors (NXPI) - Get Report are down 0.77% to $98.79 in morning trading today despite increased price targets after the company announced yesterday that they entered into a definitive agreement to merge with the Bermuda-based Freescale Semiconductor (FSL)  in a transaction which values the combined enterprise at just over $40 billion.

BMO Capital Markets raised its price target on NXP to $110 from $87 following the announcement. "Overall, the deal makes sense," analysts said.

Freescale's portfolio is "very complementary" to NXP's, and NXP's High-Performance Mixed- Signal portfolio gets "bigger and stickier," analysts noted.

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Accretion to earnings is "rather meaningful," BMO Capital Markets said, saying that for 2016 they see EPS potentially going to $7 from $6.62 upon completion of the merger, and to $8.50 in 2017.

Canaccord Genuity also raised its price target to $110, up from $97, saying post close, they anticipate approximately $11.5 billion for the top line with roughly 49% gross and 24% operating margins.

They believe management's targets of $200 million first-year and $500 million long-term cost synergies are achievable and should drive operating margins of the combined business to about 30%, well above either company today in isolation.

While the combined debt load will be initially "high," management plans to use the "considerable" free cash flow potential of the combined model to return leverage from about 3x debt/EBITDA post close to NXP's target of 2x within six quarters, analysts noted.

Canaccord Genuity estimates 40 cents to 50 cents in non-GAAP EPS accretion in 2016, and $9 to $10 in earnings power in 2017 from the combined business.

Separately, TheStreet Ratings team rates NXP SEMICONDUCTORS NV as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate NXP SEMICONDUCTORS NV (NXPI) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• NXPI's revenue growth has slightly outpaced the industry average of 10.7%. Since the same quarter one year prior, revenues rose by 18.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
• NXP SEMICONDUCTORS NV reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, NXP SEMICONDUCTORS NV increased its bottom line by earning $2.17 versus $1.34 in the prior year. This year, the market expects an improvement in earnings ($5.82 versus $2.17).
• The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Semiconductors & Semiconductor Equipment industry average. The net income increased by 55.2% when compared to the same quarter one year prior, rising from $96.00 million to $149.00 million.
• The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, NXP SEMICONDUCTORS NV's return on equity significantly exceeds that of both the industry average and the S&P 500.
• Net operating cash flow has significantly increased by 77.07% to $556.00 million when compared to the same quarter last year. In addition, NXP SEMICONDUCTORS NV has also vastly surpassed the industry average cash flow growth rate of -16.11%.
• You can view the full analysis from the report here: NXPI Ratings Report