Street Calls of the Week
Investing.com - Texas Instruments (NASDAQ:TXN) shares fell sharply in after-hours trading following the company’s second consecutive quarter of weaker-than-expected guidance, despite slightly beating September quarter revenue expectations. According to InvestingPro data, the semiconductor giant, with a market capitalization of $154 billion, is currently trading near its Fair Value, suggesting balanced market pricing.
The leading analog chip provider reported September quarter revenue that exceeded expectations by $100 million, with only a $0.01 EPS miss that could be attributed to a $0.08 restructuring charge related to the closure of two older 6-inch Texas fabrication facilities. The company maintains strong fundamentals with a healthy gross profit margin of 58% and has consistently raised its dividend for 22 consecutive years, as highlighted by InvestingPro.
December quarter guidance fell short of consensus estimates by $111 million in revenue and $0.15 in earnings per share, according to Benchmark analyst Cody Acree, who maintained a Buy rating and $220.00 price target on the stock.
The company attributed the softer outlook to a slower-than-expected industry cyclical recovery, noting that while the recovery continues, it is progressing at a pace below both historical upturns and Texas Instruments’ earlier projections.
Management indicated that while the broader industry has largely completed inventory corrections with levels now considered low and healthy, customers remain hesitant to make major project commitments, particularly in the Industrial market, due to rapidly changing tariff conditions and global macroeconomic uncertainty.
In other recent news, Texas Instruments reported mixed third-quarter results and issued fourth-quarter revenue guidance that fell below consensus expectations. The company guided fourth-quarter revenue to $4.4 billion, which was below the consensus estimate of $4.52 billion. UBS noted that this revenue guidance was in line with most investor expectations, though it highlighted weak implied gross margins. Cantor Fitzgerald pointed out gross margin pressures and end-demand softness, contributing to its decision to lower the price target to $170 while maintaining a Neutral rating. Truist Securities also lowered its price target to $175, citing mixed third-quarter results and declining gross profit margins. TD Cowen reduced its price target to $200, mentioning factors such as seasonality and underutilization affecting gross margins. KeyBanc lowered its price target to $220 following strong third-quarter results but noted lower fourth-quarter expectations. Despite these challenges, UBS reiterated a Buy rating with a $245 price target, reflecting some optimism amid investor concerns.
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