NXP Provides a Cautious 4Q Outlook but Remains a Top Semis Stock Pick; FVE Cut to $210

Narrow-moat NXP Semiconductors reported healthy third-quarter results but provided investors with a slightly soft fourth quarter forecast with the topline falling short of FactSet consensus estimates, as management cited a weakening macroeconomic environment. The forecast is comparable to those provided by rivals Texas Instruments and STMicro in recent days. We cut our fair value estimate to $210 from $240, but with shares trading in the mid-$140 range, we continue to view NXP as materially undervalued. We remain fond of NXP's secular tailwinds of rising chip content per car within the automotive market, and our long-term thesis remains intact.