Texas Instruments (TXN, Financial), known for its analog chips and embedded processors, is making headlines with its Q2 earnings and revenue projections aligning with analyst expectations. This comes after two consecutive quarters of bearish guidance, attributed to declining demand in key markets like industrial, which makes up about 40% of its revenue. Despite previous warnings of a challenging Q1, the company's latest guidance suggests a potential turnaround.
TXN's optimism is reflected in its Q2 earnings forecast of $1.05-1.25 per share, a hopeful increase from Q1's $1.10, despite being lower year-over-year. The company's revenue outlook of $3.65-3.95 billion for Q2 also indicates a possible end to its sequence of sequential declines, even as it continues to face year-over-year challenges.
Key points from TXN's Q2 guidance include:
- Adjusted Q2 earnings suggest improvement from Q1, though still below previous years.
- Q2 revenue expectations hint at breaking a pattern of sequential declines, despite ongoing year-over-year compression.
- End-market softness persists, particularly in industrial and automotive sectors, which have not seen significant sequential growth recently.
- Other sectors like personal electronics and communications equipment also experienced declines, with no areas of strength noted in Q1.
- Despite these challenges, TXN anticipates some sectors to show less decline or even positive growth in Q2, signaling a cautious optimism for recovery.
The market's reaction to TXN's guidance is notably positive, with investors hopeful that the company's inventory rebalancing is nearing an end. This sentiment is buoyed by TXN's sequential growth forecast for Q2, setting a positive precedent for the upcoming quarterly results from peers Analog Devices (ADI, Financial), Microchip (MCHP, Financial), and STMicroelectronics (STM, Financial).
