Morgan Stanley Semiconductors Weekly: Earnings Week 2 (NXPI, ON, QCOM)
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Morgan Stanley's latest semiconductor weekly report previews upcoming earnings for NXP Semiconductors, onsemi, and Qualcomm, maintaining an attractive view on the broader sector. NXP is anticipated to exceed expectations, propelled by improving cyclical dynamics and automotive momentum highlighted by recent analog chip performances. onsemi is also projected to beat estimates and raise forward guidance, although its stock has already surged 82 percent year-to-date, reflecting elevated market expectations.
Morgan Stanley raised its target price for onsemi from $64 to $85, expanding the earnings multiple from 15x to 20x. This adjustment reflects accelerating analog cycle dynamics and diversified exposure to the power market. For NXP, automotive content growth and depleted channel inventory suggest robust upside potential, justifying an Overweight rating with a $299 target. NXP's channel inventory increased slightly to 10 weeks, but depleted customer inventories may trigger a second-half restocking cycle.
Conversely, Qualcomm faces ongoing pressures from declining smartphone sales, particularly within the Android ecosystem, which is projected to fall 15 percent annually. However, robust Apple demand may provide a short-term earnings cushion. Qualcomm's data center initiatives remain a compelling call option. The firm maintains an Underweight rating on Qualcomm without assigning a specific target price. Investors should closely monitor the June guidance for NXP and onsemi, alongside Qualcomm's upcoming investor day.