Texas Instruments TXN shares have surged 18.1% year to date, underperforming the broader Zacks Computer and Technology sector’s return of 23.4%.
It has also underperformed the Zacks Semiconductor - General industry and peers Amtech Systems ASYS, NVIDIA NVDA and Alpha and Omega Semiconductor AOSL.
Over the same time frame, shares of Amtech Systems, NVIDIA, and Alpha and Omega Semiconductor have gained 43.1%, 158% and 37.2%, respectively. The industry appreciated 106.9% year to date.
The underperformance was attributed to weakness in the Industrial and Automotive end markets. Sluggishness in the Analog, Embedded Processing and Other segments is a concern.
Texas Instruments Incorporated Price and Consensus
Texas Instruments Incorporated price-consensus-chart | Texas Instruments Incorporated Quote
TXN’s Q3 Guidance Not So Bright
For the third quarter of 2024, Texas Instruments expects revenues in the range of $3.94-$4.26 billion compared with the year-ago quarter’s $4.53 billion.
The Zacks Consensus Estimate for revenues is pegged at $4.11 billion, suggesting a year-over-year fall of 9.29%.
In the third quarter of 2024, TXN expects earnings in the range of $1.24-$1.48 per share compared with the year-ago quarter's $1.85 per share.
The consensus mark for earnings is pegged at $1.36 per share, unchanged over the past 30 days. This indicates a year-over-year decline of 24.44%.
Product Innovations to Aid TXN’s Prospects
The recent launches in the Automotive and Industrial end markets bode well for TXN stock.
Texas Instruments’ newest launch of 1.5W isolated DC/DC modules with integrated transformers, helping engineers shrink the isolated bias power supply size in automotive and industrial systems by more than 89%, is a notable development.
The introduction of six MagPack power modules designed to improve power density and efficiency is also a plus. This advancement allows designers of industrial, enterprise and communications applications to achieve solid performance levels.
The unveiling of the AWR2544 77GHz mm-wave radar sensor chip, the industry's first for satellite radar architectures, enabling higher levels of autonomy by improving sensor fusion and decision-making in ADAS might gain solid traction in the Automotive market.
Expansion of 300 MM Wafer Fab Facility Bodes Well for TXN
Texas Instruments’ investments in the 300 mm wafer fab manufacturing capacity, RFAB2, is a major development, waving the path for its prospects in the semiconductor content particularly in industrial and automotive.
The new manufacturing facility has started initial production and will ramp up eventually in the coming months to support customer demands at a large scale.
This new fab will manufacture more than 100 million analog chips every day that will go into electric vehicles mostly.
Zacks Rank and Valuation
Texas Instruments’ shares are trading at a premium at this moment, as suggested by a Value score of F.
The stock is trading with a forward 12-month Price/Sales of 10.7X compared with the sector’s 6.07X.
TXN currently carries a Zacks Rank #3 (Hold), implying that investors should wait for a better entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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