Analysts Cheer Texas Instruments' Q4 Amid China & Macro Headwinds; Also Caution Against Auto Slowdown, Margin Headwinds

  • Benchmark analyst Cody Acree maintained Texas Instruments Inc TXN with a Buy and raised the price target from $189 to $203.
  • The fourth quarter came in just slightly better than forecast. TI expected sales to repeat their decline across all its major markets, except again for its Automotive business
  • The analyst believes TI's product, customer, and end market exposure positions the company to weather the current cyclical correction better than most.
  • Also contributing to TI's softer December results and March period outlook is the ongoing inventory correction.
  • BMO Capital analyst Ambrish Srivastava maintained an Outperform and raised the price target from $195 to $215.
  • Top-line guidance was lower than the consensus but higher than the analyst's expectations. EPS guidance beat the analyst's estimates. 
  • The business behaves as it should, while the Automotive segment stands out. But it is a matter of time before that weakens as well. 
  • Early benefit from the CHIPS Act (ITC part) is beginning to accrue. 
  • The analyst boosted estimates, as OpEx control is far better. 
  • KeyBanc analyst John Vinh maintained an Overweight and $210 price target.
  • TXN posted in-line 4Q22 results and guided 1Q23 lower. TXN indicated weakness across all segments except auto and will likely grow again in 1Q. 
  • Management noted that order cancelations did increase in 4Q as customers looked to destock excess inventory. 
  • The analyst views these results as being essentially in line with expectations, while guidance was "better than feared," given concerns of a weakening China economy. 
  • Credit Suisse analyst Chris Caso maintained a Neutral with a $205 price target.
  • TXN reported essentially in line, with revenue and EPS guidance below expectations consistent with the company's practice. 
  • Margins are under some pressure as depreciation from capital spending kicks in. 
  • Caso expects slower revenue and higher depreciation to yield a 400bps gross margin headwind in CY23. 
  • While CHIPS Act subsidies will help, the analyst also believes TXN is signaling capex above their $3.5 billion annual baseline due to their long-term confidence in market growth. 
  • The combination of an elevated valuation and potential incremental margin headwinds keep the analyst on the sideline, pending further detail.
  • Price Action: TXN shares traded lower by 1.11% at $175.09 on the last check Wednesday.
  • Photo Via Company
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