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Texas Instruments Incorporated (TXN), headquartered in Dallas, Texas, is a global semiconductor company that designs, manufactures, tests, and sells analog and embedded processing chips for industrial, automotive, personal electronics, communications equipment, and enterprise systems. Valued at $170.68 billion by market cap, TXN has manufacturing and design facilities, including wafer fabrication and assembly/test operations in North America, Asia, and Europe.
Shares of TXN, the world’s largest analog chipmaker, have underperformed the broader market over the past year. TXN has gained 9.6% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 14.8%. But in 2024, the gap narrowed, with TXN stock rising 8.3%, while the SPX is up 7.7% on a YTD basis.
Narrowing the focus, TXN’s underperformance is also apparent compared to the S&P 500 Technology Sector SPDR (XLK). The exchange-traded fund has gained about 12.7% over the past year. However, the stock’s returns on a YTD basis outshine the ETF’s marginal gains over the same time frame.
On Aug. 1, TXN shares closed down more than 5% along with other semiconductor stocks after Lam Research Corporation (LRCX) forecasted its Q1 adjusted EPS to be between $7.25 and $8.75, the midpoint below the consensus estimates of $8.10.
On Jul. 23, TXN shares closed down more than 3% after the company reported its Q2 results. It reported EPS of $1.22, beating the consensus estimates of $1.17. The company’s revenue of $3.82 billion matched Wall Street forecasts. TXN raised its revenue forecast range for the third quarter to be between $3.94 billion and $4.26 billion, in line with the consensus estimates of $4.12 billion. It expects Q3 EPS between $1.24 and $1.48. During the earnings call, TXN’s management said they were seeing growing demand for their chips in the industrial and automotive markets.
For the current fiscal year, ending in December, analysts expect TXN to report an EPS decline of 27.2% to $5.11 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimate in three of the last four quarters while missing the forecast on another occasion.
Among the 28 analysts covering TXN stock, the consensus rating is a “Hold.” That’s based on nine “Strong Buy” ratings, 15 “Holds,” one “Moderate Sell,” and three “Strong Sells.”
This configuration is less bullish than three months ago, when the consensus rating was Moderate Buy, with 10 suggesting a “Strong Buy” and two suggesting a “Strong Sell.”
Recently, CJ Muse analyst Cantor Fitzgerald reiterated a “Neutral” rating on TXN stock and maintained the price target of $210, implying a potential upside of 12% from current levels.
The mean price target of $206.13 represents a 10% upside from TXN’s current price levels. The Street-high price target of $255 suggests an upside potential of 36%.
On the date of publication, Dipanjan Banchur did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
