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Texas Instruments' shares will reach $60 in medium term
28 january 2015

Texas Instruments (TXN) is a US manufacturer of semiconductors. The company is a major manufacturer of chips and mobile devices.

Texas Instruments recently published a report for Q4 of 2014, quarterly revenue increased by 8.0% y-o-y to USD 3.27 bn. Adjusted EPS rose 33.3% y-o-y to USD 0.72. Analog (+13.5% y-o-y) and Embedded Processing (+10.9% y-o-y) became revenue growth drivers. An increase of 10.6 pps y-o-y in EBITDA margin also adds positivity and points to higher efficiency.

The company generated operating cash flow of USD 1.3 bn in the reporting quarter, which allows Texas Instruments to pay generous dividend of USD 0.34 (+13.3% y-o-y), matching a 2.5% dividend yield, and bought back a significant part of its own shares (the company spent USD 698 bn for this purpose last quarter).

According to our opinion, growing demand for mobile solutions will improve financial performance of Texas Instruments in the near future. According to the company’s forecast, revenue is expected to reach USD 3.07-3.33 bn (up from +3.0% to 11.7% y-o-y) in Q1 2015, adjusted EPS will amount to USD 0.57-0.67 (up from 23.9% to 45.7% y-o-y).

We believe that improving financial performance, coupled with generous dividend and buyback program, will boost shares of Texas Instruments in the medium term.

We raised our mid-term fundamental valuation of the company’s shares to USD 60. The short-term technical target is USD 56. 

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Texas Instruments' shares will reach $60 in medium term

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