Texas Instruments Analyst Says Company Better Positioned Than In 2008 Crisis

Texas Instruments Incorporated TXN is using the 2008 recession as a framework for its guidance for the second quarter and beyond, according to KeyBanc Capital Markets.

The Texas Instruments Analyst

John Vinh maintained a Sector Weight on Texas Instruments.

The Texas Instruments Thesis

Although Texas Instruments has projected revenue declines similar to the 2008 levels, it has not witnessed any significant pullback by its customers, Vinh said in a Wednesday note. (See his track record here.)

The company reported first-quarter revenue and earnings at $3.33 billion and $1.24 per share, respectively, ahead of the consensus estimates of $3.17 billion and $1 per share.

Earnings guidance for the second quarter came in at 84 cents per share, below the prior consensus estimate of 99 cents per share.

The strength in March resulted from customers building buffer inventory due to concerns of additional disruptions, and demand began abating in April, the analyst said. The guidance reflects that May and June will be below April levels, he said.

While customer backlogs were moderating, they remained “largely stable,” Vinh said.

Texas Instruments will continue to keep fab utilization sequentially flat and expects to build inventory, while offsetting this partially by lowering channel inventory “as part of its consignment strategy,” he said.