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On Tuesday, Benchmark reiterated its Buy rating on shares of Texas Instruments (NASDAQ:TXN), maintaining a $230.00 price target for the stock. Currently trading at $193.45 with a market capitalization of $176.4 billion, InvestingPro analysis suggests the stock is trading above its Fair Value.
The firm expressed increased confidence in Texas Instruments' ability to navigate the current demand volatility in the semiconductor industry. This sentiment is based on insights from a recent Fireside Chat with the company's management, which Benchmark hosted.
The analyst highlighted Texas Instruments' strategic focus on the Industrial and Automotive markets as a key factor in its resilience. These sectors are not only large and diverse in terms of applications but are also expected to benefit from the growth in semiconductor content due to advancements in electrification.
Despite a 13.26% revenue decline in the last twelve months, the company is believed to be gaining market share in these primary areas, as well as in a variety of ancillary segments. InvestingPro subscribers can access 15+ additional insights about TXN's market position and growth metrics.
Benchmark's outlook is also buoyed by the gradual recovery of the smartphone and computing industries globally. The firm sees Texas Instruments' long-term investments in leading-edge 300mm capacity and the insourcing of more wafer requirements as moves that will provide leverage for gross margin, earnings, and cash flow in the long run.
The analyst's price target of $230.00 is based on 33 times the firm's fiscal year 2026 earnings per share (EPS) estimate of $6.98. This valuation corresponds to a price/earnings to growth (PEG) ratio of 1.3 times, given the projected EPS growth rate of 25% for fiscal year 2026.
In summary, Benchmark's stance on Texas Instruments is rooted in the company's strategic positioning and long-term growth initiatives, which are expected to drive its stock performance despite the cyclical nature of the semiconductor industry.
In other recent news, Texas Instruments (TI) reported mixed Q3 2024 earnings with a 9% sequential revenue increase to $4.2 billion, despite an 8% year-over-year decline. The company's CFO, Rafael Lizardi, noted a gross profit of $2.5 billion and net income of $1.4 billion, equivalent to $1.47 per share. Over the past year, Texas Instruments returned $5.2 billion to shareholders, including a 5% dividend increase.
In the semiconductor sector, Citi has expressed a positive outlook, suggesting that the recent downturn is nearing its end. The firm anticipates a 9% year-over-year increase in global semiconductor sales in 2025, with a particular focus on companies such as Advanced Micro Devices Inc. (NASDAQ:AMD), Broadcom Inc. (NASDAQ:AVGO), and NVIDIA Corporation (NASDAQ:NVDA), among others.
TI has also initiated the production of gallium nitride (GaN)-based power semiconductors at its Aizu, Japan facility, aiming to internalize more than 95% of its GaN chip production by 2030.
Meanwhile, BofA Securities has revised its price target for Texas Instruments, reducing it to $215 from $220 while maintaining a Neutral rating, reflecting concerns over the company's sales growth and margin pressures. These are all recent developments that provide insights into the company's performance and market expectations.
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