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Texas Instruments Inc TXN

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Texas Instruments Continues to Fire on All Cylinders, but Shares Remain Overvalued; $166 FVE

Brian Colello, CPA Sector Director

Analyst Note

| Brian Colello, CPA |

Texas Instruments reported impressive second-quarter results with the top and bottom lines exceeding our expectations. The company continues to foresee chip demand in excess of supply, which TI hopes to address by adding incremental capacity in the coming quarters. Third-quarter guidance was for flattish revenue and was in line with CapIQ consensus estimates. It’s possible that TI’s third-quarter guidance is conservative once again, as revenue exceeded the high end of TI’s prior guidance for the fifth straight quarter, but as the chip industry strives to reach supply-demand balance, we don’t foresee these good times for TI (or its peers) lasting forever. We will maintain our $166 fair value estimate for wide-moat TI. Even with shares down about 4% after hours (likely based on the forecast for flattish sales next quarter), we still view shares as modestly overvalued.

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Company Profile

Business Description

Dallas-based Texas Instruments generates about 95% of its revenue from semiconductors and the remainder from its well-known calculators. Texas Instruments is the world's largest maker of analog chips, which are used to process real-world signals such as sound and power. Texas Instruments also has a leading market share position in digital signal processors, used in wireless communications, and microcontrollers used in a wide variety of electronics applications.

12500 TI Boulevard
Dallas, TX, 75243
T +1 214 479-3773
Sector Technology
Industry Semiconductors
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 30,000