Citi cuts NXP target to $260 on low data center sales

Citi downgraded NXP Semiconductors to Neutral from Buy on Thursday and reduced its price target to $260 from $370. The bank stated that it expects weaker earnings estimate revisions compared to peers heading into 2027. Shares of NXP Semiconductors dropped 2.7% in premarket trading following the report.

Analyst Atif Malik noted that the analog upturn is more than halfway through, with additional upside for analog chipmakers driven by data center expansions. NXP has limited exposure to data centers, representing 3% to 4% of sales, which is the lowest among its peers. Meanwhile, 56% of company revenue comes from the automotive sector, where demand remains subdued.

Citi lowered its 2027 and 2028 earnings estimates to $16.30 and $18.64 per share, down from prior forecasts of $16.61 and $21. The updated targets align with Street expectations due to weaker auto and industrial assumptions, while still assuming about 12% annual auto content growth above vehicle production from 2026 to 2028.

The new $260 price target reflects a price-to-earnings multiple of 14 times projected 2028 earnings, down from 17 times. This multiple matches the company's five-year average and accounts for lower data center exposure.