NXP Semiconductors' (NXPI) automotive and industrial business will help gross margin exceed 60% as the overall economy improves and factory utilization return to normal, Oppenheimer said in a report emailed Wednesday.
NXP will report Q4 results and Q1 outlook on Feb. 3, which Oppenheimer expects will be in line with consensus.
Last quarter, NXP cut its revenue forecast for Q4 by 8% due to headwinds in the automotive and industrial sectors, though China's electric vehicle market showed strength, Oppenheimer said. The recent Aviva Links and TTTech Auto acquisitions will help bolster NXP's automotive portfolio.
"We believe NXP is among the best-positioned names in our coverage universe to capitalize on rising semiconductor content in automobiles, and one of the few pure plays leveraged to the growing markets for secure ID, secure transactions, and mobile payment," Oppenheimer said.
Oppenheimer maintained an outperform rating for NXP with a $300 price target.
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