BofA Securities Upgrades Texas Instruments to Buy
BofA Securities analyst Vivek Arya upgraded Texas Instruments (NASDAQ: TXN) from Neutral to Buy with a price target of $320.00 (from $235.00).
“Texas Instruments’ (TXN) solid Q1 report and Q2 guide increases our confidence in TXN’s ability to: 1) Benefit from industrial resurgence, including in aero/defense ($1bn+ annual business), 2) Take advantage in data-center build (11% of sales, up 90% YoY), 3) Leverage the last 3 years of capex in US-fabs to potentially gain share in an “everythingis-constrained” chip environment.
Pricing has not been a factor, but could offer incremental good news in 2H which we conservatively model below seasonal trends.
Ongoing macro flux/geopolitics remains a sector-wide risk, but we think TXN has historically had a relatively more defensive profile, with improving FCF capability as it is past its big capex investment cycle.
Overall we raise CY26/27/28E GAAP EPS by 21%/31%/33% to $7.52/$9.35/$10.75, and now project FCF/sh to head towards $12/sh by CY28 from $8 in the current FY26E year.
Raise PO to $320 from $235 on 34x CY27 PE, slightly higher than 33x prior, on faster EPS growth (26% CY25-28 CAGR vs.14% prior).
We also see potential for catch-up in investor interest, given the stock’s considerable lag (100-200 percentage points) vs. the SOX over the last 1/3/5 years.”
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