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Investing.com -- TD Cowen upgraded Texas Instruments (NASDAQ:TXN) to Buy from Hold, saying the chipmaker is well-positioned to benefit from an industrial recovery and rising free cash flow as its capital spending winds down.
The brokerage raised its price target to $245, citing signs that inventory correction in the industrial semiconductor segment is nearly complete and that TI’s U.S.-based manufacturing gives it an edge as demand stabilizes.
“TI is a unique asset and should be a core TMT holding,” TD Cowen said in a note, pointing to its defensible characteristics amid macro and tariff uncertainties.
The analysts expect TI’s flexible capital expenditure plans beyond 2025 to support a sharp improvement in free cash flow.
They estimate FCF per share could rise from $2.87 in 2025 to over $7 in 2026, driven by operating leverage as utilization climbs and the company pulls back on heavy investments.
While TD Cowen acknowledged that valuation is elevated, it argued that TI’s through-cycle growth of 7–10% and normalized free cash flow margins above 35% justify a premium multiple.
They noted only a handful of large-cap tech companies offer a similar combination of scale, growth, and profitability.
The firm’s proprietary checks suggest TI’s fab utilization is running between 70–80%, ahead of some consensus estimates, implying room for operating leverage as volumes improve.
TD Cowen also highlighted that with key capacity expansions—such as RFAB2 and LFAB1—largely completed, the company can now invest more modularly, reducing the need for large upfront CapEx.
Texas Instruments is scheduled to report second-quarter results later this month.