Texas Instruments (TXN) Capital Management Event Preview - BofA Securities

BofA Securities analyst Vivek Arya reiterated a Buy rating and $225.00 price target on Texas Instruments (NASDAQ: TXN) ahead of the company's Capital Management update. 3 areas of focus for investors should be:
1) is aggressive capex justified when we are late in the cycle (remember capex does not equal capacity)

2) how much will TXN spend on its aggressive fab expansion plans (we see $3-$3.5bn annually, 14-15% of sales)

3) what will be resulting headwind to GM (200-300bps per cons.), FCF and hence FCF return capability (low/no expectations of buybacks reaccelerating near-term)?

The analyst stated "While TXN stock has held up better YTD (-4% vs SOX -11%), it has lagged considerably in the past year (+4% vs SOX +15%) on surprising reduction in buyback activity and 2H’21 HoH deceleration, but we expect tomorrow’s event to provide clarity. Meanwhile, while we acknowledge the GM headwinds, we believe investors could be ignoring positive offsets from stronger sales, pricing, mix (more 300mm, industrial/auto) and potential tax benefits from US government reshoring incentives that support FCF."

For an analyst ratings summary and ratings history on Texas Instruments click here. For more ratings news on Texas Instruments click here.

Shares of Texas Instruments closed at $187.84 yesterday.

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