Texas Instruments Reset 'Not A Shocker,' Analysts Lower Guidance After Q4 Earnings

Shares of Texas Instruments Inc TXN tanked in premarket trading on Thursday, after the company reported its fourth-quarter results.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the release.

• Cantor Fitzgerald analyst C.J. Muse maintained a Neutral rating, while reducing the price target from $180 to $170.
• Mizuho Securities analyst Vijay Rakesh reiterated a Neutral rating, while slashing the price target from $170 to $164.
• Truist Securities analyst William Stein reaffirmed a Hold rating, while tweaking the price target from $169 to $168.
• KeyBanc analyst John Vinh maintained an Overweight rating, while raising the price target from $180 to $200.
• Stifel analyst Tore Svanberg reiterated a Hold rating and price target of $160.

Check out other analyst stock ratings.

Cantor Fitzgerald: “While a miss was largely expected by the market, the magnitude was not,” Muse wrote in a note. He added that management cut their revenue guidance once again, despite five quarters of year-on-year declines, “actually accelerating to -18% Y/Y — the worst of the current downturn.”

“Mgmt attributed the decline to expectations for continued weakness in Industrial into 1Q24, combined with Automotive inventory now normalized (suggesting ongoing weakness there after a -5% decline in the Dec Q),” the analyst said.

Mizuho Securities: Although Texas Instruments reported its December quarter revenues in-line with expectations, at $4.08 billion, its March quarter guidance was lowered to $3.6 billion, Rakesh said.

“MarQ utilization down, GMs towards ~57% (lowest since 2020), BUT not cutting Capex at ~$5B/yr,” the analyst wrote. “We believe TXN could see challenges with high inventory, increasing supply/Capex/capacity and softening auto-industrial demand,” he added.

Truist Securities: “We expected TXN's Q1 outlook to reflect the start of a recovery, but guidance disappointed on further weakness in industrial, & now in autos, so growth goes lower and likely troughs in 1Q24,” Stein wrote in a note.

“While the superficial read is negative for industrial & autos semis, the cycle dynamics remain clearly out-of-phase and not worth over-reading,” he added. Texas Instruments’ recovery has been pushed out again, but the company’s reset is “not a shocker,” albeit slighter higher than expected, the analyst further stated.

KeyBanc Capital Markets: Texas Instruments’ quarterly results were “slightly” disappointing and the company guided the first quarter lower, Vinh said. “Results reflect weakening industrial, which declined ~15% q/q, and slightly weaker auto, which declined ~5% q/q,” he added.

“Implied 1Q GM of 55.7% (-390 bps) also missed due to lower revs, higher depreciation, as incremental 300mm capacity ramps and lower fab utilization,” the analyst further stated. The price target has been raised “as we roll forward valuation,” he wrote.

Stifel: Texas Instruments guided to a “significantly lower” outlook for the first quarter, “as correction worsens in Industrial (40% of CY23 revs) and widens to Auto (34%),” Svanberg said in a note. “GMs also lower (lower rev’s/fixed cost absorption + under-utilization charges), even as internal inventories go higher in dollars ($3.98bn to $4bn- $4.5bn) and days,” he added.

The company’s free cash flows remain under pressure, the analyst further stated.

TXN Price Action: Shares of Texas Instruments declined by 2.48% to $170.01 in premarket trading on Thursday.

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