NEW YORK (TheStreet) -- Shares of NXP Semiconductors (NXPI) are down -2.33% to $62.40 in pre-market trade after the semiconductor company was downgraded to "sell" from "neutral" at Goldman Sachs Group (GS) .
The firm expects consensus estimates to move lower due to cyclical headwinds, increased fourth quarter and first quarter seasonality, and a RF correction and for the multiple to contract in-line with peers due to commoditized products, increasing exposure to portable and computing, lower margins, ex-ESO accounting, and difficult growth in handsets.
The firm lowered its price target to $54 from $58.
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 several positive factors, 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 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 9.0%. Since the same quarter one year prior, revenues rose by 13.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- NXP SEMICONDUCTORS NV has improved earnings per share by 48.8% 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 turned its bottom line around by earning $1.34 versus -$0.48 in the prior year. This year, the market expects an improvement in earnings ($4.66 versus $1.34).
- 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 43.2% when compared to the same quarter one year prior, rising from $111.00 million to $159.00 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 51.25% to $242.00 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 -9.88%.
- You can view the full analysis from the report here: NXPI Ratings Report