UBS Raises Texas Instruments Price Target to $295

UBS analyst Timothy Arcuri raised the price target on Texas Instruments (NASDAQ: TXN) to $295.00 (from $260.00) while maintaining a Buy rating.

“TI delivered even amid investor expectations that rose considerably over the past few weeks, guiding revenue to a touch above seasonal but off a much higher CQ1 base (all directionally consistent with our bullish preview and read from our alternative data).

Autos remain somewhat choppy, but this is being more than offset by strength in industrial (which is starting to broaden out as the ISM grinds higher – Figure 20) and growth in data center (which has accelerated each of past three quarters).

With industrial now up ~35% Y/Y (similar to ADI), it is fair to ask whether some of this is pull-forward (e.g. ahead of price increases or maybe Strait of Hormuz uncertainty), but if this was really happening, we would probably see it across the board in autos and personal electronics too and these segments are still a bit weak.

TXN’s factory loadings are finally increasing just as depreciation peaks and capex starts to come down, so the drop-through to FCF should be very impressive and we see a path for FCF per share to ~$10.50 this year and ~$13.50 next year.

If this is right, the stock is a bit inexpensive even after this recent rally and we think this FCF power can still support a Buy rating.”

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