2 Chip Stocks Analysts are Buying

NXPI struggled alongside the broader tech sector in late 2018

by Karee Venema

Published on Jan 17, 2019 at 11:29 AM

Nomura Instinet upgraded NXP Semiconductors NV (NASDAQ:NXPI) to "buy" from "neutral," and maintained its $95 price target -- a 21.3% premium to last night's close at $78.34. The analyst in coverage said valuation is appealing after the chip stock's recent sell-off, and traders are "underappreciating an attractive end-market mix." Likewise, CrispIdea Research reiterated its "buy" rating and $88.90 NXPI price target.

Nevertheless, NXP Semiconductors stock is trading down 0.1% at $78.23. The shares longer-term trend has been lower, too, with the equity down roughly 34%. Plus, NXPI's rebound off its late-December two-year low of $67.62 has struggled against its 80-day moving average -- a trendline that's ushered the shares lower since June.

Against this backdrop, short sellers have increased their exposure to NXPI stock. Short interest is up 37% since mid-October to 17.60 million shares -- the most since late 2015. This represents 7% of the equity's available float, or 3.9 times the average daily pace of trading.

 Xilinx, Inc. (NASDAQ:XLNX) was upgraded to "buy" from "neutral" at Mizuho Securities, which also raised its price target to $100 from $77 -- a 10.5% premium to Wednesday's close at $90.49. The brokerage firm waxed optimistic on the California-based semiconductor firm's exposure to 5G, which could create tailwinds for XLNX, versus "anemic growth in other verticals and peers."

XLNX stock is trading up 0.8% today at $91.17, edging closer to its Dec. 3 18-year high of $95.18. The shares retreated after hitting this milestone, but found a familiar foothold at their 80-day trendline. The equity bounced sharply from here on Dec. 26, and have added 7% already in 2018.

A number of analysts are still on the sidelines when it comes to XLNX, though, with half still maintaining a "hold" or "strong sell" at last night's close. Plus, the average 12-month price target of $89.50 is a discount to current trading levels. This leaves the door open for more upward revisions, which could create tailwinds for the tech shares.


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