Tuesday, FBR Capital Markets upgraded Texas Instruments Inc. (TXN) shares to Outperform from Market Perform with a price target of $31. The brokerage maintained its 2009 GAAP EPS estimate of $1.10, and its 2010 estimate of $1.80.
Analyst Craig Berger said that Texas Instruments appears to be gaining meaningful analog market share, fourth quarter of 2009 analog revenues likely only a few points below peak quarterly shipments. The analyst believes further gross margin expansion toward 55% is possible over time.
The analyst has a positive view of fourth quarter of 2009 holiday sell-through given recent Golden Week sales in China, Apple's guidance, and Amazon's guidance, among others. The analyst views TXN as a fairly defensive chip stock given its large-cap nature, large net cash position, and dividend paying status. The analyst believes shares of TXN are extremely inexpensive, trading at a P/E multiple of just 12x and an EV/EBITDA multiple of just 6.8x, both 2010 GAAP, near the lower end of its historical trading ranges.
The analyst said that the bears would argue that the "semiconductory cycle" is rolling over, potential first quarter order cancellations are coming, near-term momentum metrics are peaking, and inventories are building, even though he cannot find any.
The analyst's view, however, is that very lean chip inventory at distributors and other customers, combined with a reasonably solid holiday selling season, will drive continued positive EPS estimate revisions and share price gains, with the potential for a November or December rally into year-end.
The analyst maintained his 2009 GAAP EPS estimate of $1.10, his 2010 estimate of $1.80, and his price target of $31, based on a constant 16x target P/E multiple, 2010 GAAP, he believes appropriate given TI's growth and margin profile.
While near-term volatility and a "sell the news" mentality in chip stocks of late are concerning, the analyst advised investors to buy the dip in favored growth names like Marvell Technology Group Ltd. (MRVL) or Silicon Laboratories, Inc. (SLAB), or in favored value names like TXN, ON Semiconductor Corp. (ONNN), Fairchild Semiconductor International Inc. (FCS), or Microsemi Corp. (MSCC), for a run into year-end.
Currently, TXN is up $0.23 or 0.97% and trading at $23.93.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.