Texas Instruments Recovery On Track As Analysts Monitor Industrial Sector Trends

Shares of Texas Instruments Inc TXN were trading lower on Friday, despite the company reporting better-than-expected fourth-quarter results.

The company reported its quarterly results amid an exciting earnings season. Here are some key analyst takeaways.

Rosenblatt Securities On Texas Instruments

Analyst Hans Mosesmann maintained a Buy rating and price target of $250.

Texas Instruments' fourth-quarter beat was modest and its outlook mixed, Mosesmann said in a note. The company's bottoming and recovery process seems to be "extending into 2025," he added.

"The Street will likely focus on the sequential decline in GMs for 1Q25 on LFAB underloading (mostly embedded), but management came across as within normal seasonality from a demand perspective if analog is included," the analyst wrote. The bottoming of cancellations and an improvement in orders booked and shipped within the quarter are signs of "a return to normalcy," he further stated.

Benchmark On Texas Instruments

Analyst Cody Acree reiterated a Buy rating and price target of $230.

Texas Instruments reported its quarterly sales at $4.01 billion and earnings of $1.30 per share, beating the consensus by $130 million and 10 cents per share, respectively, Acree said. Management's sales guidance came in above the Street estimate, while earnings outlook missed expectations, he added.

The company's performance is "a key indicator of semi industry health" and the latest results indicate a continued sequential decline in its Industrial and automotive businesses, while its Industrial segment seems to be "bouncing along a bottom," the analyst stated.

"Although, the company is still yet to see consistent indications of a broad industry recovery, we believe the company is well positioned when the chip cycle finally begins to turn, which we expect will become more evident through the first half of 2025," he further wrote.

Check out other analyst stock ratings.

JPMorgan On Texas Instruments

Analyst Harlan Sur reaffirmed an Overweight rating and price target of $230.

Texas Instruments delivered a beat on revenue, margins and earnings, "reflecting gradually improving cyclical trends," Sur said. The company's analog products grew year-on-year for the first time in eight quarters and management's guidance for the first quarter shows total revenue growth for the first time in nine quarters, he added.

"The cyclical end markets that saw an inflection in the previous quarters continued to improve, while the recovery in auto & industrial continues to be delayed," the analyst wrote. "Despite this, most sub-segments within these markets are stabilizing or bottoming out," he further stated,

Stifel On Texas Instruments

Analyst Tore Svanberg reiterated a Hold rating and price target of $200.

The revenue beat in the quarter was driven by personal electronics and communications equipment, Svanberg said. He added that industrial and automotive businesses remained soft.

"Embedded continues to weigh on revs and profitability…having begun its correction ~4 quarters later (~4Q23 for Embedded vs. 4Q22 for Analog)," the analyst wrote. "While management did not provide specific guidance by end market, we believe softer seasonality in PE, continued softness in Industrial (esp. Factory Automation and Energy Infrastructure, the two largest sub-sectors) and Automotive (esp. non-China)," he further stated.

Raymond James On Texas Instruments

Analyst Melissa Fairbank maintained a Market Perform rating on the stock.

Texas Instruments' first-quarter outlook reflects a seasonal decline, although the revenue guidance shows a return to year-on-year growth for the first time in several quarters, Fairbank said.

Although there were signs of stabilization across multiple end markets, headwinds from reduced factory loading and depreciation expense could continue to pressure company's earnings until there is an inflection in broad-based demand, she added.

"While we normally look to Texas Instruments to lead the industry out of a downturn, expectations for continued underutilization and elevated inventory levels are clouding the visibility somewhat, and we're reluctant to call a definitive bottom to the current cycle," the analyst wrote.

TXN Price Action: Shares of Texas Instruments fell by 5.4% to $189.74 at the time of publication on Friday.

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