NXP Semiconductors (NASDAQ:NXPI) was initiated at Overweight by Wells Fargo as the bank believes the company has an edge over competitors and is on a path to achieve $16B in annual revenue by 2027.

Wells Fargo also set a $250 price target on the stock.

NXP appears on track to achieve a gross margin percentage ranging from 57% to 63% by 2027 as well.

"NXP's hybrid manufacturing strategy is unique relative to peers," said Wells Fargo analysts Joe Quatrochi and Travis Poulin, in a Friday investor note. "NXP's approach to joint ventures (w/ ESMC, VSMC) gives the company access to 300mm capacity without the capital intensity of building/operating new fabs — allowing for lower capital intensity."

In August, NXP broke ground on a semiconductor fab in Germany it is building through a joint venture with European Semiconductor Manufacturing Company, Infineon (OTCQX:IFNNY) and Taiwan Semiconductor Manufacturing Company (TSM).

Separately, In September, NXP and Vanguard International Semiconductor were approved to establish the VisionPower Semiconductor Manufacturing joint venture, which will build a 300mm wafer fab in Singapore.

NXP shares have declined nearly 20% over the past six months, as it's been hampered by the same weakness experienced by its peers in the auto and industrial sectors.

"While we expect investors to take a wait-and-see approach for the velocity of a demand re-accel and our 2027 estimates are at the low end of NXP's total rev CAGR guide, we are positive on its competitive positioning to drive strong growth across its core growth initiatives, including SDV & intelligent edge systems," Quatrochi said.