NXP Provides a Weak Q1 Forecast but Its Long-Term Prospects Remain Bright; $225 Fair Value Estimate

NXP Semiconductors reported solid fourth-quarter results but provided investors with a tepid first-quarter forecast that was modestly below our prior expectations. We raised our fair value estimate for narrow-moat NXP to $225 from $210, mostly due to the time value of money as we roll our valuation model. We continue to view shares as undervalued, as we like NXP’s exposure to the secular tailwinds around rising chip content per vehicle and think the market is too focused on a near-term slowdown in demand.