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Investing.com - Mizuho has lowered its price target on Texas Instruments (NASDAQ:TXN) to $145.00 from $150.00 while maintaining an Underperform rating following the company’s recent earnings report. According to InvestingPro data, TXN currently trades at a P/E ratio of 28.73, which aligns with Mizuho’s concern about stretched valuations.
Texas Instruments reported September quarter revenue of $4.74 billion, approximately in line with consensus estimates of $4.66 billion. The company guided December quarter revenue to $4.40 billion, down 7% quarter-over-quarter and approximately 2% below consensus expectations of $4.50 billion. InvestingPro data shows 11 analysts have revised their earnings downwards for the upcoming period, suggesting continued caution about near-term performance.
Mizuho noted several key factors in its analysis, including a 10% quarter-over-quarter increase in automotive segment revenue despite light vehicle production declining 1%, and industrial segment revenue growing low single digits quarter-over-quarter, with recovery remaining modest. As a prominent player in the Semiconductors & Semiconductor Equipment industry, Texas Instruments’ total revenue reached $17.27 billion over the last twelve months.
The firm highlighted concerns about underutilization driving December quarter gross margins down approximately 260 basis points quarter-over-quarter to 54.8%, below the 57.2% consensus and near 10-year lows. Inventory remained flat quarter-over-quarter with days of inventory decreasing 16 days to 215. For context, TXN’s gross profit margin for the last twelve months stands at 57.48%, according to InvestingPro data.
Mizuho’s new $145 price target represents approximately 23x calendar 2026 estimated P/E, as the firm views current valuations at approximately 29x as stretched, about 32% above the peer group average of approximately 22x. InvestingPro data confirms this high valuation concern, with TXN’s PEG ratio at 13.82 and Price/Book at 8.6, suggesting the stock is trading at premium multiples relative to growth expectations. Investors seeking deeper insights can access TXN’s comprehensive Pro Research Report, available with an InvestingPro subscription.
In other recent news, Texas Instruments reported September quarter revenue that exceeded expectations by $100 million, although its guidance for the fourth quarter was weaker than anticipated. The company experienced a slight earnings per share miss, attributed to an $0.08 restructuring charge due to the closure of two older fabrication facilities. Several analysts have adjusted their price targets for Texas Instruments, reflecting concerns over its financial outlook. Bernstein reduced its price target to $160, citing a slower-than-expected recovery and challenges in management credibility. Baird also lowered its target to $195, pointing to a muted recovery pace and a dismal gross margin outlook. Truist Securities decreased its target to $175, mentioning mixed third-quarter results and declining gross profit margins. Lastly, TD Cowen adjusted its target to $200, noting headwinds affecting gross margins, including seasonality and depreciation. These developments highlight the cautious sentiment among analysts regarding Texas Instruments’ near-term performance.
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