NXP Semiconductors Offers A Nice House In A Sketchier Neighborhood

For better or worse, investor sentiment on sectors has a significant influence on the price performance of individual stocks; I’ve seen studies suggesting that 70% to 80% of a stock’s movement can be tied back to the sector. I mention that here because I think it’s a critical thing to understand with NXP Semiconductors (NASDAQ:NXPI) – the company’s differentiated end-market exposures have been helping the stock, and I like the long-term growth/valuation balance, but sentiment remains a risk with further downside to broader expectations about semiconductor demand in 2023.

Since my last update, NXP Semiconductor has outperformed the SOX by close to 15%, but lost about 15% of its value (modestly outperforming the wider market). I think auto and some parts of industrial will hold up in 2023, but I do expect a year-over-year decline in revenue and margins and it will likely take time for investors to come back to the name. All of that said, NXP shares look pretty meaningfully undervalued and worth a look from contrarian (or very patient) investors.

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NXP Semiconductors Offers A Nice House In A Sketchier Neighborhood