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Texas Instruments Analysts Cautious On Valuation Concerns, Limited Visibility Into Semiconductor Recovery

Shanthi Rexaline

Texas Instruments Incorporated (NASDAQ: TXN) reported forecast-beating results Tuesday for the first quarter but issued cautious comments on the semiconductor industry cycle.

The Analysts

UBS analyst Timothy Arcuri reiterated a Sell rating on Texas Instruments with a $90 price target.

Raymond James analyst Chris Caso reiterated a Market Perform rating.

UBS: Texas Instruments Stock Still Lags

With slightly below-consensus guidance and limited visibility into the second-half, Texas Instruments is "working its way through the cycle," Arcuri said in a Wednesday note. 

The company did not offer anything new to support the "breathtaking" rally across the semiconductor stocks this year, the analyst said. 

" ... The combination of a fairly big inventory overhang and pressure on OpM leave us still believing that this stock still lags even if the market and semis keep working." 

UBS said its 2020 outlook is slightly better due largely to 5G ongoing content growth and tighter operating expenditure control. The valuation isn't cheap either, the firm said. 

Raymond James: 'The Stock Has Beaten Us To A Bullish Call'

Texas Instruments' first-quarter upside was driven mainly by unexpected communications strength, Caso said in a Tuesday note.

The second-quarter guidance, which was below consensus and well below seasonal, reflects the effects of the industry slowdown, the analyst said. 

View more earnings on TXN

"Nonetheless, with estimates fairly well reset, this is the point in the cycle when we would typically be ready to recommend buying TXN for better growth into next year," Caso said. 

Raymond James remains cautious due to the run in the semiconductor group and the valuation of Texas Instruments.

The Price Action

Texas Instruments shares were rising 1.35 percent to $117.95 at the time of publication Wednesday. 

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Photo via Wikimedia. 

Latest Ratings for TXN

Date Firm Action From To
Apr 2019 Maintains Neutral Neutral
Apr 2019 Maintains Hold Hold
Apr 2019 Maintains Equal-Weight Equal-Weight

View More Analyst Ratings for TXN
View the Latest Analyst Ratings

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