Dallas, Texas 07/23/2015 (Financialstrend) – A slowdown in iPhone 6 and iPhone 6 Plus sales in the second quarter is slowly hurting NXP Semiconductors NV (NASDAQ:NXPI) sentiments in the Street. The giant semiconductor company had enjoyed a healthy run in the market thanks to belief that demand for iPhones remained high. However, sentiments are slowly changing as demand for the latest line of iPhones continues to wane.
NXP Banking On Contactless Payments
Apple Inc. (NASDAQ:AAPL) shipped 47.5 million devices in the quarter against estimates of 49 million. Concerns are already being raised on the number of devices the company will ship this quarter heading into the next iPhone refresh cycle. NXP Semiconductors NV (NASDAQ:NXPI) produces a number of components used in iPhones which makes its sentiments on the Street highly dependent on the number of devices shipped by Apple.
The rise of mobile payment systems is expected to play a pivotal role in offsetting the declines being experienced in the smartphone space. NXP Semiconductors NV (NASDAQ:NXPI) provides most of the chips that are used to make contactless payments, a front that it plans to dominate to offset weaknesses in its other businesses.
Apple Pay continuing to gain traction in the contactless payment sector should offer NXP Semiconductors NV (NASDAQ:NXPI) more opportunities for growth as the company already produces a feature that supports the service. Needham analyst Rajvindra Gill is remaining bullish over NXP Semiconductors long-term prospects even on the recent pullback. The analyst has a buy rating on the stock with a share price target of $140.
However, the analyst has slashed his full year revenue expectations for the company to between $2.35 billion and $5.2 billion down from a previous guidance of between $3 billion and $5.50 billion. NAND pricing pressure as well as lower gross margin profile and lower than expected enterprise SSD business could weigh in on the company’s earnings according to the analyst.