Mizuho raises Texas Instruments target to $200, maintains neutral stance Via Investing.com

Friday – Mizuho revised its outlook on Texas Instruments (NASDAQ:), raising the price target to $200 from the previous $190, while maintaining a neutral rating on the stock. The company adjusted its forecast for Texas Instruments' December quarter revenue and earnings per share (EPS) from $4.1 billion and $1.37 to $3.96 billion and $1.25, respectively. The update falls slightly below consensus estimates, which stand at $4.08 billion in revenue and $1.32 in EPS.

The revision reflects a strong stance on the company's fiscal year 2025 (F25E) and 2026 (F26E) expectations as well. The company's new forecast for the F25E is $17.5 billion in revenue and $6.25 in EPS, down from $17.8 billion and $6.35, while for the F26E, the forecast has been revised up from $19.7 billion and $7.44 to $20 billion and $7.73 billion in revenue and EPS, respectively.

The revised price target of $200 is based on a multiple of 32.0 times the company's F25E EPS, which represents an increase from the previous multiple of 29.9 times. This rating is considered appropriate for Texas Instruments, as it is seen as the blue-chip leader in the analog semiconductor space. The new target is also in line with the broader expansion of the semiconductor sector, which now trades at about 22.7 times earnings, up from about 20 times.

Mizuho's position reflects the view that Texas Instruments is rightly valued at a premium given its position in the industry. The company's decision to maintain a neutral rating suggests that while it recognizes the company's leadership position, the current stock price adequately reflects Texas Instruments' future prospects according to their revised ratings.

In other recent news, Texas Instruments has been among several important developments. The earnings report for the third quarter of 2024 is expected to show revenue of $4.10 billion, a net margin of 58.2%, and earnings per share (EPS) of $1.36, according to Bernstein SocGen Group. However, the company maintains an underperform rating on Texas Instruments, citing concerns about the company's fourth quarter and the market's potential forward-looking financial projections.

Texas Instruments increased its quarterly cash dividends by 5% for the 21st consecutive year, reflecting an unwavering commitment to shareholder returns. The company also provided projections for its capital expenditures for fiscal year 2026 and beyond, forecasting free cash flow per share in 2026 to be between $8 to $12, exceeding analyst consensus estimates.

Analyst firms gave mixed responses to the development. Rosenblatt has maintained a buy rating on Texas Instruments, highlighting the company's continued bookings and loading improvements. TD Cowen, meanwhile, maintained a hold rating, while Benchmark and KeyBanc reiterated buy and overweight ratings, respectively.

Additionally, Texas Instruments is under scrutiny by the US Senate Subcommittee on the use of semiconductors in Russian weapons. The hearing is intended to test the company's compliance with export controls designed to prevent Russia from acquiring American technology.

InvestingPro Insights

In addition to Mizuho's analysis, InvestingPro's data provides additional context about Texas Instruments' financial position and market value. The company's market capitalization reaches $181.06 billion, indicating its significant presence in the semiconductor industry. TXN's P/E ratio of 34.38 is in line with Mizuho's valuation of 32.0 times F25E EPS, indicating that the market is pricing in strong growth expectations.

InvestingPro Tips highlights Texas Instruments' strong dividend history, as it has increased its dividends for 21 consecutive years and maintained payouts for 54 years. This emphasizes the company's financial stability and commitment to shareholder returns, which may justify its premium valuation in the semiconductor sector.

However, it is important to note that analysts expect a decline in sales this year, with revenue growth of -14.5% over the past twelve months. This is in line with Mizuho's conservative stance on near-term revenue projections. Despite this, TXN remains profitable, with a gross margin of 59.36% and an operating income ratio of 36.17% over the past twelve months.

For investors looking for a more comprehensive analysis, InvestingPro offers 13 additional tips for Texas Instruments, providing in-depth information about the company's financial health and market conditions.

This article was created with the support of AI and reviewed by an editor. For more information see our T&C.