By Angela Palumbo
Texas Instruments stock was having its worst day in three years as analysts shared mixed commentary on the chip maker after its earnings showed demand is still lackluster in the automotive industry.
While Texas Instruments reported better-than-expected fourth-quarter earnings and revenue after the market closed on Thursday, management's financial guidance was disappointing. That sent the stock lower on Friday.
According to Dow Jones Market Data, shares of Texas Instruments were down 5.9% to $188.73. That put the shares on pace for their largest percentage decrease since Feb. 3, 2022, when the company outlined plans to increase spending on semiconductor manufacturing. The stock was the worst performer in the Nasdaq 100 on Friday.
Texas Instruments chips go into products in multiple sectors, including autos, industrials, and consumer electronics. Demand in the auto and industrial markets has been weak for some time, which is a problem because Chief Executive Haviv Ilan said on the company's earnings call that in 2024, about 70% of revenue came from industrial and automotive customers.
"In the broader industrial/auto end markets, we're not at the bottom yet, " Truist Securities analyst William Stein wrote in a note late Thursday. He lowered his target on Texas Instruments' stock price to $195 from $199 but continues to rate the stock at Hold.
Other analysts are more optimistic about where the shares can go.
"We maintain our Buy rating, especially on a pullback, as we continue to see a sharp recovery taking place as we move through this year," UBS's Timothy Arcuri wrote. His target for the share price is $250.
Citi analyst Christopher Danely agrees. He wrote in a note that demand for analog chips, which are used in autos and industrial equipment, will eventually bounce back in 2025, "given sales are still down 25% from the peak." Danely, who rates the stock as a Buy with a $235 price target, added that investors should buy the stock on "any weakness."
Meanwhile, Bernstein analyst Stacy Rasgon rates Texas Instruments at Underperform with a $140 price target. Rasgon wrote in a note on Friday that increased inventories Texas Instruments reported are a concern and lead him to believe that a recovery won't arrive soon. Management said on the earnings call that inventory at the end of the quarter was $4.5 billion, up $231 million from the prior quarter.
Write to Angela Palumbo at angela.palumbo@dowjones.com
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(END) Dow Jones Newswires
January 24, 2025 12:41 ET (17:41 GMT)
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