Credit Suisse Raises Price Target On Texas Instruments As Consistency Is Exciting

In a report published Tuesday, Credit Suisse analyst John W. Pitzer reiterated a Neutral rating on

, and raised the price target from $50.00 to $55.00. In the report, Credit Suisse noted, “For C4Q, TXN posted in-line Rev and upside to EPS and guided C1Q Rev modestly above and EPS modestly below consensus – albeit lower-than-expected TR and asset sale in C4Q benefited EPS by ~$0.04 and ~$0.02 cents respectively, higher-than-expected TR in C1Q impacted by EPS ~$0.02. Excluding one-times, we view TXN as a solid meet to slightly beat report/guide. While TXN is gaining share, we see results as largely consistent with sustainable industry growth as echoed by solid reports from LLTC and MXIM and what we expect to be solid reports from other more diversified companies in the following 10 days. We are modestly raising our CY15 GAAP EPS to $3.04 from $3.00 versus Street of $2.89, and initiating a CY16 EPS of $3.28 versus Street of $3.09. Specific to TXN, despite strong operating performance over the last two years, we continue to see margin leverage especially as Embedded (20.5% of rev) drives margin leverage from 17.0% in C4Q to a more targeted range of 20- 25% – in addition, TXN has a 2.47% dividend yield and can sustainable retire ~3% of S/O per year – implying a LT return model of ~5-7% topline growth and double digit FCF/Share and EPS growth. We raise our TP to $55.00 from $50.00, which represents 16.4x times our CY16 Non-GAAP EPS (w/ options) of $3.36.” Texas Instruments closed on Monday at $55.05.