FBR Capital Upgrades Texas Instruments (NYSE: TXN) to Outperform
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FBR Capital upgrades Texas Instruments (NYSE: TXN) from Market Perform to Outperform. Price target $31.
FBR analyst says, "We are upgrading shares of TXN to Outperform given: (1) TI appears to be gaining meaningful analog market share (4Q09 analog revenues likely only a few points below peak quarterly shipments); (2) we believe further gross margin expansion toward 55% is possible over time; (3) we have a positive view of 4Q09 holiday sell-through given recent Golden Week sales in China, Apple's (Nasdaq: AAPL) guidance, and Amazon's (Nasdaq: AMZN) guidance, among others; (4) we view TI as a fairly defensive chip stock given its large-cap nature, large net cash position, and dividend paying status; and (5) we believe shares of TXN are extremely inexpensive, trading at a P/E multiple of just 12x and an EV/EBITDA multiple of just 6.8x (both 2010 GAAP), near the lower end of its historical trading ranges. The bears will argue that the "semiconductory cycle" is rolling over, potential 1Q order cancellations are coming, near-term momentum metrics are peaking, and inventories are building (even though we cannot find any!)...We maintain our 2009 GAAP EPS estimate of $1.10, our 2010 estimate of $1.80, and our $31 price target, based on a constant 16x target P/E multiple (2010 GAAP), we believe appropriate given TI's growth and margin profile. While near-term volatility and a "sell the news" mentality in chip stocks of late are concerning, we advise investors to buy the dip in favored growth names like Marvel (Nasdaq: MRVL) or Silicon Labs (Nasdaq: SLAB), or in favored value names like TXN, On Semi (Nasdaq: ONNN), Fairchild (NYSE: FCS), or Microsemi (Nasdaq: MSCC), for a run into year-end."
To see more analyst ratings on TXN Click Here.
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