Citi: Texas Instruments Still A Buy

In a report published Thursday, Citi analysts maintained a Buy rating on Texas Instruments Incorporated TXN, while reducing the price target from $66 to $62. The analysts believe that the current weakness in the company's performance is "temporary."

Texas Instruments reported poor 1Q15 results and guided 2Q15 below consensus, citing weakness in the PC/storage and wireless infrastructure end markets and currency headwinds.

The company reported its 1Q15 revenue at $3.15 billion, representing a 4 percent q/q decline and missing the consensus of $3.20 billion. EPS, at $0.69, was in-line with Citi's estimate and ahead of the consensus of $0.66, on account of a lower tax rate.

Texas Instruments' 2Q15 disappointing was disappointing, with revenue of $3.12-$3.38 billion, representing merely 3 percent q/q growth. The company guided to 2Q15 GAAP EPS of $0.60-$0.70, below Citi's prior estimate of $0.76 and consensus of $0.73.

• The revenue and EPS estimates for 2015 have been reduced from $13.9 billion to $13.1 billion and from $3.28 to $2.78, respectively.
• The revenue and EPS estimates for 2016 have been reduced from $14.7 billion to $13.7 billion and from $3.67 to $3.10, respectively.
• The revenue and EPS estimates for 2017 have been reduced from $15.5 billion to $14.5 billion and from and $4.03 to $3.48, respectively.

"We reiterate Buy on TXN as we believe the weakness will be temporary and our thesis remains unchanged – TI has the most earnings upside and best payout ratio in our coverage universe…we believe its operational excellence combined with superior usage of cash will result in one of the highest earnings growth in our coverage universe," the analysts wrote.