Even the best companies in the world can have a bad quarter, or in some cases are just reporting for the first time and not everybody is pleased. Every quarter, good companies get absolutely crushed if they come in under expectations, especially if they have been a hot stock the momentum traders have been on.
In a new research report, SunTrust Robinson Humphrey has three just such companies. Quality stocks that got pummeled and may be offering investors the best entry point in some time. All three are rated Buy and could have big upside for patient investors.
This is considered a top play for investors looking for a chip stock with Internet of Things exposure. NXP Semiconductors N.V.’s (NASDAQ: NXPI) merger with Freescale Semiconductor was widely applauded on Wall Street, and many analyst believe the merger can transform the company into a powerhouse. The merger will make NXP the fourth largest in the semiconductor industry. It is also important to note that the combined company would be the number one supplier in auto semiconductors, number one supplier in global microcontrollers and a dominant supplier in mobile payments.
NXP is getting its chips into high-growth areas such as contactless mobile payments, the Internet of Things, mobile-phone charging, increased cellular data consumption and LED lighting. The two business segments that cover these products grew 39% and 29% year over year, very impressive numbers.
The company reported very mixed third-quarter results, and the forward guidance was way below what Wall Street was looking for. SunTrust maintains that if management can successfully convince investors that its long-term growth targets, which are 10% sales growth and 20% earnings per share growth, are still viable and intact, the huge sell-off could wind up looking like an outstanding buying opportunity.
The SunTrust price target for the stock is $125, and the Thomson/First Call consensus target is $123.86. The stock closed Thursday at $73, down almost 20%.