Semiconductor giant NVIDIA Corporation (NVDA) has demonstrated a stellar growth story over the past few years. The company’s revenue and EPS have increased at 42.9% and 40.3% CAGRs over the past three years, respectively. The stock has gained more than 160% over the past five years.
As advancements in technology have gained pace thanks to the pandemic, there might be opportunities for many budding tech companies to register NVDA-like growth in the future.
Technology company Xperi Inc. (XPER) supports connected lives and homes. The company powers next-generation smart devices, automobiles, and entertainment experiences.
While XPER’s shares have lost 8.2% over the past month, they have gained 3.5% over the past five days to close its last trading session at $13.18.
Here are the factors that could influence XPER’s performance in the near term:
Recent Spin-Off
XPER recently celebrated its first day of trading as an independent company after its spin-off, as an independent media platform company, on the New York Stock Exchange.
Jon Kirchner, XPER’s chief executive officer, stated, “Today we stand as an independent company with a strong balance sheet, an executive team with substantial tenure, and an exciting path to significant growth and profitability. The realization of this strategic milestone is the result of years of continuous effort.”
Discounted Valuation
In terms of its forward EV/Sales, XPER is trading at 0.95x, 63.1% lower than the industry average of 2.58x. Additionally, the stock’s forward Price/Sales multiple of 1.10 is 55.9% lower than the industry average of 2.51.
Favorable Analyst Expectations
Analysts expect XPER’s EPS for the fiscal year 2023 to increase 97.9% year-over-year. Street revenue estimate for the same year of $536.02 million indicates a 7.3% improvement from the prior year.
The two Wall Street analysts rating the stock have rated it as Buy. The 12-month median price target of $26.50 indicates a 101.1% potential upside. The price targets range from a low of $23.00 to a high of $30.00.
POWR Ratings Reflect Promising Prospects
XPER’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. XPER has a Sentiment grade of B, in sync with its favorable analyst expectations.
The stock also has a B grade for Quality, consistent with its trailing-12-month gross profit margin of 74.52%, which is 48% higher than the industry average of 50.35%.
In the 92-stock Semiconductor & Wireless Chip industry, it is ranked #3. The industry is rated B.
Click here to see the additional POWR Ratings for XPER (Growth, Value, Momentum, and Stability).
View all the top stocks in the Semiconductor & Wireless Chip industry here.
Bottom Line
XPER’s recent spin-off might bolster the company’s growth. Moreover, given its cheap valuation, Wall Street analysts expect a sizeable increase in its stock price in the near term. So, it could be an ideal investment now.
How Does Xperi Inc. (XPER) Stack Up Against its Peers?
While XPER has an overall POWR Rating of A, one might consider looking at its industry peers, STMicroelectronics N.V. (STM) and Renesas Electronics Corporation (RNECF), which also have an overall A (Strong Buy) rating.
XPER shares were trading at $13.23 per share on Wednesday afternoon, up $0.05 (+0.38%). Year-to-date, XPER has declined -29.48%, versus a -17.62% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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