Texas Instruments (TXN, Financials) beat Wall Street expectations in the first quarter and offered upbeat guidance for Q2, but JPMorgan isn’t getting carried away just yet. The firm lowered its price target to $195 from $230, citing some caution around trade risks and softening demand later this year. Still, it kept an Overweight rating, pointing to solid fundamentals and long-term potential.
The chipmaker posted earnings of $1.28 per share in Q1, topping the $1.06 estimate, and brought in $4.1 billion in revenue, ahead of the $3.91 billion forecast. Looking ahead, the company expects revenue between $4.17 billion and $4.53 billion in the second quarter, with earnings per share in the $1.21 to $1.47 range.
JPMorgan acknowledged that Texas Instruments is benefiting from a broad recovery across industrial and other end markets, even as demand in personal electronics remains soft. But the firm flagged that trade tensions—especially tariffs tied to China, where the company earns about half its revenue—could become a bigger issue later in the year.
The company has tried to stay ahead of those risks by shifting more production outside the U.S., though analysts said that strategy could take time to fully pay off. Gross margin for the quarter came in at 58.14%, better than expected, but JPMorgan thinks margins could come under pressure from weaker demand and rising depreciation costs.
Despite trimming the price target, the bank remains optimistic about Texas Instruments’ long-term prospects. The company’s track record—55 straight years of dividend payments—makes it a favorite among income investors, and the current stock price is slightly below fair value based on some financial models.
