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4 Reasons To Buy Texas Instruments Shares Right Now

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4 Reasons To Buy Texas Instruments Shares Right Now

Despite having appreciated 15 percent over the past three years, Texas Instruments Incorporated (NASDAQ: TXN) is currently trading at the high end of the semi valuations, Credit Suisse’s John W. Pitzer expects the company’s potential EPS upside to support continued stock appreciation.

Pitzer upgraded the rating on the company from Neutral to Outperform, while raising the price target from $77 to $90.

Reasons To Buy

“Our upgrade is based upon: (1) CY17 Street Estimates that are wrong and too low — under modeling both Rev Growth and OpM Leverage, (2) Continued dominant franchise position which skews risk to duration not fundamentals, (3) Our view that TXN is positioned to benefit from potential Tax Reform and (4) Solid downside support at ~$70 or a 3 percent dividend yield,” the analyst explained.

EPS Drivers

Pitzer pointed out that there were multiple EPS drivers for Texas Instruments, including the company’s revenue, operating margin expansion and tax reform, expecting the company to report its CQ4 revenue and EPS, as well as issuing its CQ1 guidance, ahead of the consensus expectation.

Despite core Texas Instruments outgrowing over the past several years, the analyst noted that the Street was modelling revenue growth of 3.2 percent for calendar year 2017, well below the peer average of 5 percent and the seasonal implied of 7 percent.

“In addition, Street is only modeling OpM expansion of ~100 bps in CY17, ~500 bps trough-to-peak versus normal cyclical TXN median of 1500 bps,” Pitzer mentioned.

At last check, shares of Texas Instruments were up 0.84 percent on the day to trade at $74.77.

Image Credit: By Texas Instruments (Own work) [CC BY 3.0], via Wikimedia Commons

Latest Ratings for TXN

DateFirmActionFromTo
Dec 2019MaintainsEqual-Weight
Oct 2019MaintainsSell
Oct 2019ReiteratesBuy

View More Analyst Ratings for TXN
View the Latest Analyst Ratings

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