Texas Instruments goes south as outlook drags on chipmaker's shares
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Texas Instruments (NASDAQ:TXN) shares fell nearly 3% Wednesday even as analysts defended the analog chip giant after it issued a weak outlook for the first quarter of the year.
Jefferies analyst Mark Lipacis reiterated the firm's buy rating on Texas Instruments (TXN) and said it would be buyers of the stock after the fourth-quarter results, as it's likely that a V-shaped recovery starts to happen later this year.
Lipacis said he believes "a 'V' recovery would lead to tight capacity again" by the first-half of 2024, if not the second half of 2023. And, given Texas Instruments' (TXN) capacity additions, Lipacis believes the company can take market share, particularly amongst U.S. and European customers looking to re-shore some of their operations. 
Lipacis added that if the current downturn follows a similar pattern to the 2009 and 2019-2021 downcycles, it should take Texas Instruments (TXN) about two to three quarters for revenue to go from peak-to-trough. Lipacis said this insinuates that revenue will hit bottom in the second quarter of this year, and the broader industry could see tight capacity again either later in 2023 or in the first part of 2024.
For its 2022 fourth quarter, TI (TXN) earned $2.13 a share, as revenue fell 3.3% year-over-year, to $4.67B. Analysts were looking for the company to earn $1.98 a share on $4.63B in revenue.
Looking ahead, Texas Instruments (TXN) expects first-quarter revenue to be between $4.17B and $4.53B, compared to the consensus estimate of $4.42B. Earnings are forecast to be between $1.64 and $1.90 a share with the midpoint below analysts' $1.87-a-share estimate.
Susquehanna analyst Christopher Rolland noted the fourth-quarter results came in "about as expected," with all segments, excluding automotive, missing estimates, but there is hope for the medium-term.
"While the company witnessed increased cancellations, they have yet to see competitive pricing declines or concessions, as these 'typically occur later' in a downcycle," Rolland wrote in a note to clients. 
Rolland also noted that Texas Instruments (TXN) management said it is not employing any long-term customer agreements or NCNR contracts and the company now expects to receive proceeds from the 25% investment tax credit in the U.S. CHIPS Act.
Oppenheimer analyst Rick Schafer, who has an outperform rating on Texas Instruments (TXN), added he likes the company's "diverse" portfolio and the "call option" benefits from the CHIPS Act.
Texas Instruments (TXN) recently announced a CEO transition, with Haviv Ilan set to take over for Rich Templeton, effective April 1.