Texas Instruments Reports Third Quarter Results Exceeding Expectations

Shares of Texas Instruments Inc (TXN) surged in early trading on Wednesday following the release of the company’s third-quarter financial results.

The earnings season is currently generating significant excitement, and Texas Instruments’ results drew considerable attention. Below are key takeaways from various analysts regarding the company's performance.

• Bank of America Securities analyst Vivek Arya maintained a Neutral rating on TXN but reduced the price target from $220 to $215.
• JPMorgan analyst Harlan Sur kept an Overweight rating with a steady price target of $230.
• Benchmark analyst Cody Acree reaffirmed a Buy recommendation while also retaining a price target of $230.
• Rosenblatt Securities analyst Hans Mosesmann sustained a Buy rating, increasing the price target to $250.

BofA Securities mentioned, "We don’t yet see the lift-off in TXN sales growth," Arya noted in his report. He also highlighted how increasing depreciation might adversely affect the company’s gross margins moving into 2025, suggesting that this aspect is not fully reflected in current consensus estimates.

Texas Instruments provided guidance that was labeled as "sluggish" for the fourth quarter. Nonetheless, the stock experienced an uptick in after-hours trading due to optimism surrounding the potential end of inventory corrections, according to the analyst. Arya remarked, "On the positive side, TXN continues to build a comprehensive manufacturing footprint that could provide low-cost capacity in the next upcycle."

JPMorgan reported that Texas Instruments surpassed expectations in revenue, margins, and earnings for the third quarter, showcasing an improvement in cyclical trends, according to Sur. He noted that all regions, except EMEA (Europe, the Middle East, and Africa), experienced sequential growth during the quarter.

However, management projected a 7% sequential decline in sales, which fell short of consensus estimates. Sur mentioned, "We believe the outlook reflects gradually improving cyclical trends, albeit at a slower pace given the more muted demand trends in industrial and automotive markets."

Benchmark expressed positive sentiments about Texas Instruments, emphasizing that the company delivered better-than-expected results for the third quarter. Conversely, the fourth-quarter guidance for both revenue and profit did not meet expectations. Acree noted that investors reacted favorably, as they had anticipated an even more cautious outlook due to disappointing news in the automotive sector.

With elevated inventory levels, the company is positioned to "aggressively compete for sockets it was forced to pass on during the COVID-related supply constraints," which should help maintain momentum in its non-automotive and industrial sectors, according to Acree.

Rosenblatt Securities indicated that Texas Instruments’ guidance for the fourth quarter suggests revenues will range from $3.7 billion to $4 billion. This range missed the consensus midpoint estimate of $4.1 billion. The projected earnings per share at the midpoint is $1.18, also below the consensus estimate of $1.36.

Investors are viewing the recovery across the company's non-strategic segments—including personal electronics, communication, and enterprise—as indicators of a possible rebound in the strategic industrial and automotive areas in the first half of 2025. Mosesmann emphasized that, "To support analog sales growth, companies need to invest in new equipment rather than reusing existing machinery, and we do not foresee the industry keeping pace with TI's roadmap for approximately six 300mm fabs into the 2030s."

Price Movement: Texas Instruments’ shares rose by 3.46% to $200.69 during Wednesday’s trading session.

Texas, Instruments, Earnings