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UPDATE: UBS Securities Reiterates On Texas Instruments As Diversified Growth Should Drive Margins

Dwight Einhorn

In a report published Tuesday, UBS Securities analyst Stephen Chin reiterated a Neutral rating on Texas Instruments (NASDAQ: TXN), and raised the price target from $49.00 to $52.00.

In the report, UBS Securities noted, “A number of things went right with TI's Q2 results as broad-based growth led by Industrial and Auto segments generated 8% y/y growth and helped to drive record gross margins and EPS upside. We believe Q3 gross margins will also reach a new high driven by higher volumes, lower depreciation, and favorable mix of high margin Analog and Embedded Processing sales.

"While we think valuation prices in much of the solid execution on margins, we think the combination of diversified sales and strong cash return to shareholders makes TI a good defensive name. We believe further upside in earnings is possible if TI can realize less seasonality in its business, implement further efficiencies in its front/back-end manufacturing operations, and foster more catalog sales through the distribution channel.”

Texas Instruments closed on Monday at $49.17.

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