FBR Capital Maintains an 'Outperform' on Texas Instruments (TXN); Acquiring National Semi to Further Build Scale
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Price: $279.58 +2.25%
Rating Summary:
24 Buy, 22 Hold, 5 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
24 Buy, 22 Hold, 5 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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FBR Capital maintains an 'Outperform' on Texas Instruments (NYSE: TXN).
FBR analyst says, "Indeed, TI is now an even bigger analog competitor than before with TI and National combining to claim about 18% global analog market share, meaningfully ahead of closest peers Analog Devices (6%), Maxim (6%), Linear Technology (4%), and Intersil (4%). We do expect this deal to close without issue, and given the meaningful premium to National's close, and given the strong strategic fit with TI's business, we expect no other bidders to surface. Net, TI's acquisitions of National should be a solid opportunity for TI to build scale, grow its product offering, improve its manufacturing efficiencies, and accelerate EPS growth, all at a fair (but not inexpensive) price. Stepping back, we remain constructive on TXN shares given the firm is building competitive advantages with its leading analog market share, 300 mm manufacturing strategy, counter-cyclical capacity investments, unmatched manufacturing and product development scale, large sales force, portfolio cross-selling capabilities, and 13x P/E (2011 GAAP). Within analog, we prefer shares of MXIM given that firm is arguably faster growing and trading at the same P/E multiple (after adjusting out TI's baseband contribution)."
"Lateral beneficiaries include Maxim (Nasdaq: MXIM), Analog Devices (NYSE: ADI), Linear (Nasdaq: LLTC), Intersil (Nasdaq: ISIL), ON Semi (Nasdaq: ONNN), Fairchild Semi (NYSE: FCS), Intl Rectifier (NYSE: IRF). Many chip firms should trade higher on the potential for more M&A within the technology or semiconductor sector. Indeed, most of these firms trade between 9x-13x P/Es, still very palatable levels and, along with reasonably solid global demand trends, a main reason we are still constructive on the chip sector despite a lack of catalysts in summer months. We think potentially attractive takeout plays include FCS (10x P/E) and IRF (11x P/E), which have high exposure to industrial and automotive, have attractive high voltage technologies, and still trade inexpensively. MXIM, ADI, LLTC, and ISIL are close comparables to NSM and could also trade higher from the TI bid. Two other firms in our coverage we have said could be takeover candidates include Silicon Labs (Nasdaq: SLAB) (MP) and Atmel (Nasdaq: ATML) (MP), both with attractive products and technology positions."
For more ratings news on Texas Instruments click here and for the rating history of Texas Instruments click here.
Shares of Texas Instruments closed at $34.11 yesterday.
FBR analyst says, "Indeed, TI is now an even bigger analog competitor than before with TI and National combining to claim about 18% global analog market share, meaningfully ahead of closest peers Analog Devices (6%), Maxim (6%), Linear Technology (4%), and Intersil (4%). We do expect this deal to close without issue, and given the meaningful premium to National's close, and given the strong strategic fit with TI's business, we expect no other bidders to surface. Net, TI's acquisitions of National should be a solid opportunity for TI to build scale, grow its product offering, improve its manufacturing efficiencies, and accelerate EPS growth, all at a fair (but not inexpensive) price. Stepping back, we remain constructive on TXN shares given the firm is building competitive advantages with its leading analog market share, 300 mm manufacturing strategy, counter-cyclical capacity investments, unmatched manufacturing and product development scale, large sales force, portfolio cross-selling capabilities, and 13x P/E (2011 GAAP). Within analog, we prefer shares of MXIM given that firm is arguably faster growing and trading at the same P/E multiple (after adjusting out TI's baseband contribution)."
"Lateral beneficiaries include Maxim (Nasdaq: MXIM), Analog Devices (NYSE: ADI), Linear (Nasdaq: LLTC), Intersil (Nasdaq: ISIL), ON Semi (Nasdaq: ONNN), Fairchild Semi (NYSE: FCS), Intl Rectifier (NYSE: IRF). Many chip firms should trade higher on the potential for more M&A within the technology or semiconductor sector. Indeed, most of these firms trade between 9x-13x P/Es, still very palatable levels and, along with reasonably solid global demand trends, a main reason we are still constructive on the chip sector despite a lack of catalysts in summer months. We think potentially attractive takeout plays include FCS (10x P/E) and IRF (11x P/E), which have high exposure to industrial and automotive, have attractive high voltage technologies, and still trade inexpensively. MXIM, ADI, LLTC, and ISIL are close comparables to NSM and could also trade higher from the TI bid. Two other firms in our coverage we have said could be takeover candidates include Silicon Labs (Nasdaq: SLAB) (MP) and Atmel (Nasdaq: ATML) (MP), both with attractive products and technology positions."
For more ratings news on Texas Instruments click here and for the rating history of Texas Instruments click here.
Shares of Texas Instruments closed at $34.11 yesterday.
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