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Investing.com - Baird has lowered its price target on Texas Instruments (NASDAQ:TXN) to $195.00 from $220.00 while maintaining an Outperform rating on the stock. The semiconductor giant, currently valued at $155.2 billion, has demonstrated remarkable consistency with 22 consecutive years of dividend increases. According to InvestingPro analysis, the stock is currently trading near its Fair Value.
The research firm cited an "ongoing recovery, albeit at a muted pace" for the semiconductor company, along with what it described as a "dismal gross margin outlook." The company currently maintains a gross profit margin of 58.03%, with InvestingPro data showing high EBITDA and revenue valuation multiples.
Baird noted that while industry-wide distribution and analog integrated circuit inventories remain high, inventory days are normalizing for original equipment manufacturers (OEMs) and original design manufacturers (ODMs).
The firm indicated this normalization will benefit Texas Instruments, which has reduced its distribution exposure in recent periods.
Baird also highlighted that Texas Instruments’ internal inventories are heading into a fourth consecutive quarter of decline and have now reached targeted levels, which the firm considered an "encouraging note."
In other recent news, Texas Instruments reported September quarter revenue that exceeded expectations by $100 million, despite a slight EPS miss attributed to a restructuring charge. However, the company issued weaker-than-expected guidance for the fourth quarter, marking the second consecutive quarter of such forecasts. This has led several analyst firms to adjust their price targets for the company. Truist Securities lowered its price target to $175, citing mixed third-quarter results and declining gross profit margins. TD Cowen also reduced its target to $200, pointing to challenges like seasonality and underutilization. Meanwhile, UBS maintained its Buy rating with a $245 target, noting that revenue guidance was in line with most investor expectations, although concerns about gross margins persist. KeyBanc reduced its price target to $220, acknowledging strong third-quarter results but highlighting the lower guidance for the fourth quarter. These developments provide insight into the current market sentiment surrounding Texas Instruments.
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