Texas Instruments falls after 'weaker' revenue outlook 'surprise,' say analysts

[Texas Instruments Inc (TI) HQ in Silicon Valley]
Sundry Photography/iStock Editorial via Getty Images

Shares of Texas Instruments (NASDAQ:TXN [https://seekingalpha.com/symbol/TXN]) fell about 8% premarket on Wednesday after mixed third-quarter results and weaker outlook drew lukewarm reactions from analysts.

Jefferies kept a Hold rating on Texas Instruments' stock and lowered the price target on the shares to $180 from $185.

"Guidance reflects a more normal seasonal decline as the cyclical upswing seems to be on pause for the Analog group. TXN finally lowered utilizations to slow the build of inventories, but that puts further pressure on GMs [gross margins]. We'll continue watching from the sidelines on TXN given relative valuation vs. the least amount of cyclical recovery left in the group," said analysts led by Blayne Curtis.

The analysts noted that the company's guidance [https://seekingalpha.com/news/4505993-texas-instruments-tumbles-amid-mixed-q3-results-weak-guidance] was below Street estimates but largely in-line with expectations for mid/high-single digit revenue [https://seekingalpha.com/news/4506330-texas-instruments-gaap-eps-of-1_48-misses-by-0_01-revenue-of-4_74b-beats-by-100m] decline as the broader recovery is pushed out.

The analysts said that they expect seasonality to continue into March, suggesting numbers need to come down further, but finally cutting utilization is the right move given the backdrop.

"We expect the rest of the Analog group to see similar softness vs estimates that are still modeling a cyclical recovery. We’ve been below the Street on GMs, but that gap should narrow with this reset. We don’t love the Analog group here given the lack of any cyclical recovery until maybe Q2 next year and remain on the sidelines for TXN, said Curtis and his team.

Morgan Stanley maintained its Underweight rating on the shares but decreased the price target on the stock to $175 from $192.

"TXN had upside in September, and we expected some margin pressure in December, but weaker revenue outlook was a surprise," said analysts led by Joseph Moore.

The analysts said they are surprised that there has been no upside versus seasonal in the second half of 2025, and still expect better revenues ahead.

"While we have been cautious on a variety of factors, and felt that the company would likely be below the low-end of its $20-26bn revenue range for 2026 on the day that guidance was given, we are still surprised at a seasonal 2H," said the analysts.

Moore and his team noted that the macro cycle and the micro/inventory cycle should support modest tailwinds to the business, and they continue to hear modestly upbeat commentary from their checks around order rates in industrial markets.

"We think that should materialize for TI at some point, and are a little surprised that we aren't seeing that now," the analysts added.

Meanwhile, CFRA Research has a Hold rating on Texas Instruments.

"TXN posted Q3 EPS of $1.48 vs. $1.49 consensus (miss) but sales grew 14% (+7% Q/Q), beating our 12% forecast, with growth across all end markets," said analyst Angelo Zino.

Zino noted that EPS grew just 1% despite strong revenue due to margin pressures from elevated capex and $85M restructuring charges.

"Q4 guidance disappointed with revenue of $4.22B-$4.58B and EPS of $1.13-$1.39 at midpoint, missing expectations of $4.5B and $1.39, respectively," said Zino. “We estimate FCF per share will approach $8-$12 in 2026 assuming sustainable revenue growth, with increased cash returns likely as FCF pressures ease.”

Separately, Texas Instruments saw price target cuts at several other firms. Susquehanna reduced the price target on the stock to $200 from $240. KeyBanc cut the price target to $220 from $240, while Stifel reduced the price target to $170 from $185.

Related stocks: Marvell Technology (MRVL [https://seekingalpha.com/symbol/MRVL]), STMicroelectronics (STM [https://seekingalpha.com/symbol/STM]), Analog Devices (ADI [https://seekingalpha.com/symbol/ADI]), and NXP Semiconductors each fell nearly -2% premarket on Wednesday, while Lattice Semiconductor (LSCC [https://seekingalpha.com/symbol/LSCC]) was largely flat.

_Update: The story was updated with a CFRA research note and information on price target cuts at more firms._

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