Texas Instruments turns south as outlook proves disappointing
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Texas Instruments (NASDAQ:TXN) shares gave up as much as 4% Wednesday after the semiconductor maker gave a business outlook that suggested potential rough waters ahead for the chip sector.
On Tuesday, TI (TXN) said that for the fourth quarter of 2022, it expects to earn between $1.83 and $2.11 a share on revenue of $4.4B to $4.8B. That outlook fell short of analysts' estimates for TI (TXN) to earn $2.23 a share on $4.94B in sales.
The outlook was also colored by company officials' comments about the state of its business going forward. Speaking on a conference call to discuss TI's (TXN) results, investor relations director Dave Pahl said that weakness that the company had been experiencing in its industrial business, and that with the exception of its automotive offerings, such weakening sales are expected to "broaden into most of the [company's] other market as well as we move into the fourth quarter."
Among Wall Street analysts, Mizuho Securities' Vijay Rakesh said that even with its industry-leading market share in signal processors, and strong gross margins, TI (TXN) "faces potential peak margins and elevated pricing pressure as industry supply improves into a potential [macroeconomic] slowdown.
TI's (TXN) outlook took the shine off a better-than-expected third quarter report in which it earned $2.47 a share, on revenue of $5.24B, while analysts had forecast a profit of $2.39 a share, on $5.14B in sales.
Wall Street analysts currently have a consensus hold rating on TI's (TXN) stock, while Seeking Alpha authors give the shares a buy rating. Seeking Alpha's quant system, which historically outperforms the stock market, currently has a hold rating on TI's (TXN) stock.