Texas Instruments sinks as Wall Street worries over demand, free cash flow
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Texas Instruments (NASDAQ:TXN) shares fell more than 4.5% in pre-market trading on Wednesday after the analog semiconductor company reported weak second-quarter results and guidance, prompting Wall Street analysts to worry about demand for the company's products and its free cash flow.
Morgan Stanley analyst Joseph Moore, who has an underweight rating on Texas Instruments (TXN) shares, said that other than automotive, the business "remains soft" and gross margins are starting to come down. 
"We do see personal electronics rebounding at some point, given 50% declines, but overall we see little upside near term," Moore wrote in an investor note.
Moore, who also has a per-share price target of $164 on Texas Instruments (TXN) shares, said the company is underperforming its peers both on a revenue and margin basis. With the headwinds that the supply chain caused having mostly subsided, the company faces new tailwinds, including margin pressure and an "outsized" revenue decline. 
Competitor Analog Devices (ADI) was down 1.9% in pre-market trading on back of the results.
Bank of America analyst Vivek Arya, who has a neutral rating and per-share price target of $195 on Texas Instruments (TXN), said the company's free cash flow margin of less than 17% was the weakest since 2010. 
"We see continuing [free cash flow] weakness as gross/operating margins come under pressure (~11% growth in [estimated 2025] as decelerates)," Arya wrote in a note. 
Arya also noted that Texas Instruments (TXN) saw a "high level" of cancellation activity and the aforementioned weakness in all end-markets except for automotive.
Oppenheimer analyst Rick Schafer was a bit more positive, noting the quarter was "mixed" but it's still a "steady as she goes" situation. 
Schafer said the company's "broad industrial exposure" is impacted by macro uncertainty, but its portfolio and ability to add capacity also help support its long-term, low-cost growth.
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