Texas Instruments dips even as Benchmark sees 35% upside
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Texas Instruments (NASDAQ:TXN) shares struggled on Thursday even as investment firm Benchmark started coverage on the chip maker, noting it has continued to gain market share and diversify its businesses.
Analyst Cody Acree started coverage on Texas Instruments (TXN) with a buy rating and a $205 price target, implying some 35% upside from current levels, noting that the company has 19% of the analog market, compared to 12.7% for Analog Devices (ADI). It also controls 15% of the embedded processing market and has been a "steady share gainer" in both markets, the analyst pointed out.
"These segments offer almost inverse traits to wireless, such as broad product, customer, and end application diversity; product, application, and design win cycles that often span decades; stable pricing; low capex requirements; and accretive gross margins," Acree wrote in a note to clients. "All of this leads to TIâs high returns on investment and rapidly growing cash flows."
Texas Instruments (TXN) shares fell slightly more than 0.5% to $151.65 in premarket trading on Thursday.
In addition, Acree noted that Texas Instruments (TXN) now serves roughly 100,000 customers and has more than 80,000 products and has continued to make both the industrial and automotive markets "strategic" due to their fast growth.
Acree noted that even though Texas Instruments' (TXN) analog sales have grown 46% over the past two years, its analog-related operating margins have expanded 15% and its embedded processing revenue has grown 40%, it still trades at a discount to peers.
On Wednesday, investment firm Bank of America downgraded Texas Instruments (TXN), noting its preference for Analog Devices (ADI).