Christopher Danely, Citi Analyst, has been downgraded NXP Semiconductors NV (NASDAQ 🙂 Neutral to Buy, as he feels that the margin expansion thesis is true.

The analyst sees margin close to peaking, hence, it is unlikely that NXPI shares can outperform “until a correction resets the bar.”

“Our Buy thesis back in February 2021 was based on an anticipation of superior margin/EPS upside and strength from the automotive end market,” said Danely before adding that he still expects auto strength to continue for a while.

“Now that NXP margins have expanded, there is only 50 basis points left to peak gross margins and 100 basis points left to peak operating margins. We view other stocks such as , , , and with more margin expansion,” he added.

Price target reduced to $190.00 per Share from $240.00. This is due a reduced target multiple.

NXPI stock prices are down 2.4% pre-opening today

By Senad Karaahmetovic