Wells Fargo Reiterates Underweight Rating on Texas Instruments (TXN)
Wells Fargo analyst Gary Mobley reiterated an Underweight rating and $150.00 price target on Texas Instruments (NASDAQ: TXN).
The analyst comments "The What. CNBC reported this morning that Elliott Management has made a $2.5B investment in TXN and is urging the company to improve free cash flow by adapting a less rigid plan for capital expenditures. As a reminder, TXN is planning to spend $5B/yr in capex through 2026 to increase revenue capacity to $30B by 2026. According to the article, Elliott is requesting TXN adapt a "dynamic capacity-mgmt strategy" that would allow TXN to achieve free cash flow/sh of $9 by 2026 (Street '26 est. ~$6). Why Elliott's Request May be Unrealistic. As we highlighted in our recent initiation report, TXN has earmarked certain expansion plans in TX & UT fabs. These projects are underway, & given the financial/build commitments for these fabs, it would be very difficult for TXN to alter capex plans as outlined through FY26 (e.g. $5.0B/yr). It is important to point out TXN’s capital intensity can be moderated from $5.0B/yr after certain projects are completed in FY26, meaning FY26-30 capex is flexible."
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Shares of Texas Instruments closed at $199.60 yesterday.