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On Thursday, Stifel analysts adjusted their outlook on Texas Instruments (NASDAQ:TXN) shares, reducing the price target from the previous $200.00 to $160.00, while keeping a Hold rating on the stock. Currently trading near its 52-week low at $146.97, the stock has declined over 21% year-to-date. According to InvestingPro analysis, the company appears fairly valued at current levels. This price target adjustment comes after Texas Instruments reported their fourth-quarter earnings for 2024 and provided guidance for the first quarter of 2025.
Texas Instruments’ fourth-quarter revenue showed a 4.1% increase compared to Stifel’s estimates, and the company’s forecast for the first quarter of 2025 was slightly more optimistic than expected, at a 1.2% increase over Stifel’s projections. Despite these figures, the company’s performance is still being affected by weaker Industrial and Automotive markets, which aligns with Stifel’s broader macroeconomic analysis. Notably, the company maintains strong fundamentals with a 3.71% dividend yield and has raised its dividend for 21 consecutive years - one of several positive indicators available on InvestingPro.
The company’s industrial revenue experienced a notable year-over-year decline of 600 basis points (bps), which is a stark contrast to its historical annual gains ranging from 100bps to 400bps. This downturn is only the second time Texas Instruments has seen a decline in this sector, with the previous drop being a modest 100bps in 2022 and a flat performance in 2023.
Furthermore, Texas Instruments’ Embedded segment is continuing to face challenges, as it is currently in a downcycle that began approximately four quarters after the Analog segment. The Embedded segment’s operating margins (OMs) were significantly impacted, decreasing by 964bps quarter over quarter. This decline was due to a combination of a sharper revenue fall and the disproportionate effects of factory under-utilization charges. Despite these challenges, InvestingPro data shows the company maintains a strong financial health score, with liquid assets exceeding short-term obligations and a moderate debt level. For deeper insights into TXN’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Texas Instruments has been at the center of several significant developments. The company faces new challenges due to heightened geopolitical tensions between the U.S. and China. An emergency notice from the China Semiconductor Industry Association regarding the origin of chip imports has raised concerns about potential disruptions to Texas Instruments’ operations in the Chinese market. Meanwhile, Baird analyst Tristan Gerra upgraded Texas Instruments’ stock from Neutral to Outperform, citing positive cycle indicators and effective management of pricing during previous upcycles as reasons for the upgrade. Gerra noted that lead times have normalized, and operational expenditure reductions have been announced, indicating a potential rebound. Additionally, Texas Instruments has launched the world’s smallest microcontroller, the MSPM0C1104, designed to optimize space in compact applications without sacrificing performance. This new MCU is part of a portfolio aimed at enhancing sensing and control in embedded systems. The company’s participation in embedded world 2025 in Nuremberg, Germany, will showcase its advancements in smarter, more connected technologies.
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