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Citi Upgrades NXP Semiconductors: From Sell to Neutral Amid Market Challenges

NXP Semiconductors (NXPI) has been upgraded by Citi from "Sell" to "Neutral" with a revised price target of $210, up from $200, reflecting a valuation of 20x C26 EPS. This change comes as consensus estimates have dropped approximately 30% from their peak, now only 10% above Citi's projections, suggesting that most of the downside is already priced in. The report highlights NXPI's Q4 2024 results, which slightly exceeded expectations due to strong performance in China, accounting for 37% of revenue. However, guidance for Q1 2025 is lower, primarily due to the exit from low-margin products in the Communications segment, which comprised 13% of Q4 sales.

NXPI's Q4 2024 sales were $3.11 billion, a 4% q/q decline but slightly above the consensus of $3.10 billion. The gross margin was 57.0%, aligning with expectations. The company reported EPS of $2.72, surpassing the consensus of $2.69. Despite these results, NXPI's guidance for Q1 2025 anticipates a revenue decline to $2.80 billion and a gross margin drop to 55.7%, both below consensus estimates. Citi notes, "We believe most of the downside is in estimates and the stock," justifying the upgrade to Neutral.

NXPI's current price is $202.35, a slight decrease of 0.02% from the previous close.