Shares of Texas Instruments Inc (TXN) soared in early trading on Wednesday after the company unveiled its third-quarter earnings, providing a peek into the ongoing recovery of the semiconductor industry. The results came amidst an exhilarating earnings season, prompting a wave of reactions from analysts. Let’s dive into the key takeaways from these expert opinions.
Bank of America Securities:
Analyst Vivek Arya maintained a Neutral rating on TXN while trimming the price target from $220 to $215. Arya’s note highlighted that he doesn’t anticipate a significant uptick in TXN sales growth in the near future. He added that rising depreciation poses a challenge for the company’s gross margins in 2025, potentially exceeding the consensus estimates. While Texas Instruments’ Q4 guidance was characterized as ‘sluggish,’ Arya expressed optimism, stating that the stock’s after-hours surge reflects expectations of an end to inventory correction. He also emphasized the positive impact of TXN’s expanding manufacturing footprint, positioning it for low-cost capacity in future upcycles.
JPMorgan:
Analyst Harlan Sur reaffirmed an Overweight rating and a price target of $230 for TXN. Sur acknowledged that Texas Instruments delivered impressive results for the third quarter, exceeding expectations on revenues, margins, and earnings, which he attributed to ‘gradually improving cyclical trends.’ While all regions except EMEA (Europe, the Middle East, and Africa) witnessed sequential growth, management’s Q4 sales guidance, indicating a 7% sequential contraction, fell short of the consensus. However, Sur emphasized that the outlook reflects a positive trajectory, albeit at a slower pace, given the more muted demand trends in industrial and automotive end markets.
Benchmark:
Analyst Cody Acree reiterated a Buy rating and a price target of $230 for TXN. Acree noted that Texas Instruments’ Q3 results exceeded expectations, but the Q4 guidance for both revenue and profit fell short of analyst estimates. Despite this, investors responded positively, seemingly anticipating an even more conservative outlook, given recent disappointing news from the automotive sector. Acree also highlighted that the company’s elevated inventory positions it to ‘aggressively compete for sockets,’ which could fuel momentum in its non-automotive and industrial businesses. He expects this to further strengthen TXN’s supply and capacity advantages as core markets witness a rebound in shipments next year.
Rosenblatt Securities:
Analyst Hans Mosesmann maintained a Buy rating and a price target of $250 for TXN. Mosesmann pointed out that Texas Instruments’ Q4 revenue guidance, ranging from $3.7 billion to $4 billion, fell short of the consensus estimate of $4.1 billion at the midpoint. Similarly, the company’s projected earnings of $1.18 per share at the midpoint trailed the consensus estimate of $1.36 per share. However, Mosesmann emphasized that the recovery in non-strategic segments like personal electronics, communication, and enterprise, all of which delivered 20-30% sequential growth in Q3, is seen by investors as a potential indicator of an upswing in strategic industrial and automotive segments in the first half of 2025. He also cautioned that to sustain analog sales growth, companies need to invest in new equipment, and the industry might not keep pace with Texas Instruments’ roadmap, which outlines the addition of six 300mm fabs by the 2030s.
Price Action:
At the time of publication on Wednesday, TXN shares had climbed by 3.46% to $200.69, reflecting the market’s optimism following the earnings announcement. This rally underscores investor confidence in Texas Instruments’ ability to navigate the evolving semiconductor landscape and capitalize on future growth opportunities.
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