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Earnings Update: Here's Why Analysts Just Lifted Their NXP Semiconductors N.V. (NASDAQ:NXPI) Price Target To US$273

Investors in NXP Semiconductors N.V. (NASDAQ:NXPI) had a good week, as its shares rose 6.1% to close at US$249 following the release of its first-quarter results. The result was positive overall - although revenues of US$3.1b were in line with what the analysts predicted, NXP Semiconductors surprised by delivering a statutory profit of US$2.47 per share, modestly greater than expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for NXP Semiconductors

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Following last week's earnings report, NXP Semiconductors' 26 analysts are forecasting 2024 revenues to be US$13.1b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be US$11.11, roughly flat on the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$13.1b and earnings per share (EPS) of US$10.62 in 2024. So the consensus seems to have become somewhat more optimistic on NXP Semiconductors' earnings potential following these results.

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The consensus price target rose 9.6% to US$273, suggesting that higher earnings estimates flow through to the stock's valuation as well. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on NXP Semiconductors, with the most bullish analyst valuing it at US$370 and the most bearish at US$150 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 2.0% by the end of 2024. This indicates a significant reduction from annual growth of 11% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 17% per year. It's pretty clear that NXP Semiconductors' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards NXP Semiconductors following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that NXP Semiconductors' revenue is expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple NXP Semiconductors analysts - going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 3 warning signs for NXP Semiconductors that you need to be mindful of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.