KeyBanc has revised its price target for Texas Instruments (TXN, Financial), reducing it from $250 to $215 due to a tightening in market multiples. Despite this adjustment, the firm has maintained an Overweight rating on the stock. The decision comes in the wake of Texas Instruments reporting robust first-quarter results and providing second-quarter guidance that surpassed expectations.
The positive performance has been largely attributed to a recovery phase in the industrial sector, with the cycle hitting a low point and a noticeable uptick in activity. Additionally, low customer inventory levels across various end markets have contributed to the company's strong showing.
However, KeyBanc has highlighted some concerns regarding the current tariff situation. Although customers are proactively managing inventories by accelerating purchases, there have not yet been any adverse effects noted as a result of tariff uncertainties.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 27 analysts, the average target price for Texas Instruments Inc (TXN, Financial) is $181.20 with a high estimate of $250.00 and a low estimate of $125.00. The average target implies an upside of 19.09% from the current price of $152.15. More detailed estimate data can be found on the Texas Instruments Inc (TXN) Forecast page.
Based on the consensus recommendation from 36 brokerage firms, Texas Instruments Inc's (TXN, Financial) average brokerage recommendation is currently 2.8, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Texas Instruments Inc (TXN, Financial) in one year is $162.04, suggesting a upside of 6.5% from the current price of $152.15. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Texas Instruments Inc (TXN) Summary page.
TXN Key Business Developments
Release Date: April 23, 2025
- Revenue: $4.1 billion, up 2% sequentially and 11% year-over-year.
- Analog Revenue: Increased 13% year-over-year.
- Embedded Processing Revenue: Approximately flat year-over-year.
- Other Segment Revenue: Grew 23% from the year-ago quarter.
- Gross Profit: $2.3 billion, representing 57% of revenue.
- Operating Expenses: $989 million, up 6% from a year ago.
- Operating Profit: $1.3 billion, or 33% of revenue, up 3% year-over-year.
- Net Income: $1.2 billion, or $1.28 per share.
- Cash Flow from Operations: $849 million for the quarter.
- Capital Expenditures: $1.1 billion for the quarter.
- Free Cash Flow: $1.7 billion on a trailing 12-month basis.
- Dividends Paid: $1.2 billion in the quarter.
- Stock Repurchases: $653 million in the quarter.
- Total Debt Outstanding: $12.95 billion with a weighted average coupon of 3.93%.
- Inventory: $4.7 billion, up $160 million from the prior quarter.
- Second Quarter Revenue Guidance: Expected to be in the range of $4.17 billion to $4.53 billion.
- Second Quarter EPS Guidance: Expected to be in the range of $1.21 to $1.47.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Texas Instruments Inc (TXN, Financial) reported a revenue increase of 11% year-over-year, reaching $4.1 billion in the first quarter of 2025.
- Analog revenue grew by 13% year-over-year, indicating strong performance in this segment.
- The industrial market showed a broad recovery, increasing in upper single digits after seven consecutive quarters of decline.
- Texas Instruments Inc (TXN) returned $6.4 billion to shareholders over the past 12 months through dividends and stock repurchases.
- The company maintains a strong balance sheet with $5 billion in cash and short-term investments, providing financial stability.
Negative Points
- Gross profit margin decreased by 90 basis points sequentially, indicating some pressure on profitability.
- Operating expenses increased by 6% from the previous year, which could impact overall profitability.
- The personal electronics market declined by mid-teens, reflecting typical seasonal trends but also indicating potential weakness in this segment.
- There is high uncertainty in the global market due to tariffs and geopolitical tensions, which could impact future performance.
- Customer inventories are at low levels across all end markets, which could pose risks if demand does not recover as expected.
