11:13 AM EST, 11/06/2024 (MT Newswires) -- NXP Semiconductors ( NXPI ) is not "immune" to automotive headwinds as it is facing challenges throughout automotive and industrial and internet of things, Morgan Stanley said in a Tuesday note.

The semiconductor manufacturer is preparing to end market weakness by reducing utilization and foundry purchases, expecting utilization will be in the low 70s through H1 next year, the note added.

"But we expect the snapback to be mild as balance sheet inventory across semi suppliers is likely to intensify competition and limit utilization improvement," according to the note.

The automotive challenges were "inevitable" although the company's attention on hybrid manufacturing balanced throughout regions positioned them well against supply chain uncertainty, Morgan Stanley added.

After Q3 earnings, there is more "incentive" for NXP to be "more cautious than overly optimistic" because of clouded end market visibility, the note added.

Morgan Stanley lowered NXP Semiconductors' ( NXPI ) price target to $235 from $250 and maintained an equalweight rating on the stock.

Shares of the company were up 3% in recent Wednesday trading.

Price: 232.18, Change: +7.53, Percent Change: +3.35