TI (TXN) Slated for Potential 30% Upside Without Doing Anything Different - Barron's
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They say everything is bigger in Texas: cattle, trucks, full-brimmed hats, the women. Well, add "stock upside" to that list.
According to a recent Barron's article, there's plenty of room for Texas Instruments to grow. Last quarter, Texas Instruments reported a 60 percent drop in profit and an 8 percent dip in revs. Over the last 52 weeks, Texas Instruments stock has dropped 13 percent.
Moving ahead, bulls on Texas Instruments say the company is now focusing more on analog chips, ones that go in devices like industrial equipment and medical technology, Barron's said. Further, Texas Instruments is pushing into smartphone and tablet chips, hoping to produce items for such devices as Barnes & Noble's (NYSE: BKS) NOOK and Amazon.com's (Nasdaq: AMZN) Kindle Fire. The move might be possible, with last year's $6.5 billion acquisition of National Semi adding enough capacity to meet any surge in demand Texas Instruments might face.
Investors will be paid to wait; Texas Instruments currently doles-out about 68 cents per share per year for a currently yield of 2.2 percent. Not the richest on the Street, but certainly enough to outpace inflation. In addition, Barron's noted Texas Instruments' payout might increase to a yield of 3.5 percent within the next few quarters.
One Bernstein analyst highlighted Texas Instruments' book-to-bill rose from just about 0.8x last year to now over 1.0x, leading to a potential 30 percent bulge in share value with no sacrifice to valuation.
Shares are going for 12.8x next year's EPS expectations, below the stock's historical average of 17x. That multiple would put Texas Instruments stock just north of $40, or upside of 31 percent.
But with about 20 Hold ratings versus 22 Buys, analysts are still skeptical. Some say Texas Instruments may have overpaid for National Semi, giving an 80 percent premium at the time of the deal, with no sure signs of an uptick in chip ordering expected. Shares are also priced-in at 17x FY12 EPS views, leading little for upside in the near-term, ceteris paribus.
On National Semi, Barron's said Texas Instruments' product portfolio jumped by about 12,000 new items, about three to four times that of its nearest competitor. In addition, Texas Instruments saw a 17 percent jump in analog chip orders. Though the process is slow, Texas Instruments will be working to move Nationals' 150- and 200-mm wafers to the more lucrative 300-mm line.
Though Barron's has been bullish on Texas Instruments before (following the National Semi deal), the time might be right to take up a spot with the tech giant ahead of the upcoming Microsoft (Nasdaq: MSFT) Windows 8 product refresh, new Apple items, Nokia (NYSE: NOK) unveiling its collaborations with Windows 8, and many more catalysts.
According to a recent Barron's article, there's plenty of room for Texas Instruments to grow. Last quarter, Texas Instruments reported a 60 percent drop in profit and an 8 percent dip in revs. Over the last 52 weeks, Texas Instruments stock has dropped 13 percent.
Moving ahead, bulls on Texas Instruments say the company is now focusing more on analog chips, ones that go in devices like industrial equipment and medical technology, Barron's said. Further, Texas Instruments is pushing into smartphone and tablet chips, hoping to produce items for such devices as Barnes & Noble's (NYSE: BKS) NOOK and Amazon.com's (Nasdaq: AMZN) Kindle Fire. The move might be possible, with last year's $6.5 billion acquisition of National Semi adding enough capacity to meet any surge in demand Texas Instruments might face.
Investors will be paid to wait; Texas Instruments currently doles-out about 68 cents per share per year for a currently yield of 2.2 percent. Not the richest on the Street, but certainly enough to outpace inflation. In addition, Barron's noted Texas Instruments' payout might increase to a yield of 3.5 percent within the next few quarters.
One Bernstein analyst highlighted Texas Instruments' book-to-bill rose from just about 0.8x last year to now over 1.0x, leading to a potential 30 percent bulge in share value with no sacrifice to valuation.
Shares are going for 12.8x next year's EPS expectations, below the stock's historical average of 17x. That multiple would put Texas Instruments stock just north of $40, or upside of 31 percent.
But with about 20 Hold ratings versus 22 Buys, analysts are still skeptical. Some say Texas Instruments may have overpaid for National Semi, giving an 80 percent premium at the time of the deal, with no sure signs of an uptick in chip ordering expected. Shares are also priced-in at 17x FY12 EPS views, leading little for upside in the near-term, ceteris paribus.
On National Semi, Barron's said Texas Instruments' product portfolio jumped by about 12,000 new items, about three to four times that of its nearest competitor. In addition, Texas Instruments saw a 17 percent jump in analog chip orders. Though the process is slow, Texas Instruments will be working to move Nationals' 150- and 200-mm wafers to the more lucrative 300-mm line.
Though Barron's has been bullish on Texas Instruments before (following the National Semi deal), the time might be right to take up a spot with the tech giant ahead of the upcoming Microsoft (Nasdaq: MSFT) Windows 8 product refresh, new Apple items, Nokia (NYSE: NOK) unveiling its collaborations with Windows 8, and many more catalysts.
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