Texas Instruments drops as BofA downgrades shares and other chip stocks on growth concerns
Texas Instruments (NASDAQ:TXN) shares dropped on Wednesday as investment firm Bank of America downgraded the stock, noting its preference for Analog Devices (NASDAQ:ADI).
Analyst Vivek Arya moved Texas Instruments (TXN) to neutral from buy, while also cutting the price target to $175 from $190, pointing out that he believes Analog Devices (ADI) has overtaken Texas Instruments (TXN) as the top analog chip company due to "accelerating" free cash flow returns, whereas is using its money for new U.S.-based fabs. 
"Note [Texas Instrument's] FCF% exceeded [Analog Devices] from 2017-21 as was impacted by its prior M&A, by exiting some consumer (iPhone) business and by Huawei restrictions," Arya wrote in a note to clients, adding that he expects Analog Device's (ADI) free cash flow generation to exceed Texas Instruments (TXN) going forward. 
Texas Instruments (TXN) shares fell slightly more than 2% to $150.60, while Analog Devices (ADI) dipped slightly to $148.10 in premarket trading.
In addition, Bank of America also downgraded several other semiconductor stocks, including Skyworks Solutions (NASDAQ:SWKS), Qorvo (NASDAQ:QRVO) and Teradyne (TER), highlighting the "maturity" of the 5G smartphone cycle, as well as elevated inventory and rising competition from Qualcomm (QCOM) and the uncertainty of Apple (AAPL) moving to 3 nanometer in its 2023 product cycle.
The firm also upgraded Cadence Design Systems (CDNS) and Synopsys (SNPS) to neutral, pointing out that demand for chip design software and verification are expected "to grow unabated on secular growth in R&D intensity."
On Tuesday, investment firm Citi listed Texas Instruments (TXN) as one of the top semiconductor companies with the most revenue exposed to China.
Analysts have been mixed on Texas Instrument's stock (TXN). It had an average rating of HOLD from Wall Street analysts, while Seeking Alpha authors are more positive on it and rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rated TXN a HOLD.