Texas Instruments (NASDAQ:TXN) shares fell 3.5% in pre-market Wednesday following the company’s Q2 results.
While EPS of $1.87 and revenue of $4.53 billion (down 13% year-over-year) came in better than the consensus estimates of $1.76 and $4.37B, respectively, Q3 guidance missed expectations.
“Similar to last quarter, we experienced weakness across our end markets with the exception of automotive,” CEO Haviv Ilan said.
The company cited a slow recovery in consumer and enterprise demand, which has led to a lack of fresh chip orders from clients.
For Q3/23, the company expects EPS in the range of $1.68-$1.92, compared to the consensus of $1.91, and revenue in the range of $4.36-$4.74B, compared to the consensus estimate of $4.6B.
Bernstein analysts reiterated a Market Perform rating and a $145 per share price target on TXN.
"We note that we aren't knocking their long-term strategy (we get it) but investors may now be waking up to the implications, and we believe it makes the shares challenging to own as they invest substantial sums into a cycle peak amid very elevated valuations; it feels hard to argue for significant upside at this point," they commented.
UBS analysts lowered the price target by $5 per share to $185 as gross margins and market share "remain issues."
"We continue to see both sides here and while TXN very much fits our "first-out" investment approach (along with TER), there are not many semis stocks we can think of that have done well in the face of compressing gross margins (even if just optics around depreciation)," they wrote.
Additional reporting by Senad Karaahmetovic