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- NXP Semiconductors (NASDAQ:NXPI), On Semiconductor (NASDAQ:ON), STMicroelectronics (NYSE:STM) and Wolfspeed (NYSE:WOLF) have been listed among Cowen's favorite semiconductor stocks for 2022, noting "accelerating content growth" for electric vehicles.
- Analyst Matthew Ramsay noted the aforementioned four companies, along with Infineon, are poised to see increasing spend in electronic vehicles, a market that is growing considerably due to increased consumer awareness, improving economics and government support that will help drive "material power semiconductors growth throughout this decade-plus trend."
- Ramsay rates NXP Semiconductors (NXPI) outperform and boosted his price target to $265, up from $255. He also boosted his price targets on On Semiconductor (ON) and Wolfspeed (WOLF) to $65 and $145, up from $58 and $115, respectively.
- NXP (NXPI) shares have gained 37% year-to-date, while STMicroelectronics (STM) and Wolfspeed (WOLF) have gained 25% and 5%, respectively.
- Ramsay acknowledges that the current environment for semiconductors is favorable, given that supply is still lower than demand. However, he believes that auto-related semiconductors will be able to grow "well beyond" this cycle.
- The investor focus on seasonally adjusted annual rate underestimates the true growth of semiconductor content into autos, especially as the industry transitions from internal combustion engines into electric systems, Ramsay added.
- Separately, the speed at which electric vehicles into next-generation vehicles is taking place "faster than is widely appreciated," along with systems-in-a-chip helping growth, notably in the vehicle's drivetrains.
- Earlier this month, Citigroup selected NXP (NXPI), On Semi (ON) and Micron (NASDAQ:MU) as some of its top picks, adding that any weakness in semiconductors stocks should be bought.