Texas Instruments declined as a result of Bernstein’s revenue and margin concerns. In the pre-market trading session on Wednesday, shares of Texas Instruments (NASDAQ: TXN) dropped by more than two percent after the investment firm Bernstein downgraded the analog semiconductor maker. The business cited worries regarding the company’s revenues and gross margins.
Analyst Stacy Rasgon lowered his rating on Texas Instruments (TXN) shares from market performance to underperform, but he maintained his price target of $145. He commented that it appears Wall Street projections are too high with the business “structurally” rising spending to build revenue growth over the next 10 to 15 years. However, he maintained his price target.
In “short order,” according to Rasgon, it appears as though gross margins are likely heading towards the level of 60% or even lower, which is “well below expectations.” In addition, the general view on Wall Street regarding revenue for the fourth quarter is that it will be “well above” seasonal levels, and there appears to be “over-exuberance” regarding predictions for 2024.
According to forecasts from a consensus of market analysts, Texas Instruments (TXN) is expected to earn $1.84 per share on revenue of $4.52 billion in the fourth quarter.
According to what Rasgon noted, “Taking everything into consideration, Bernstein’s numbers appear to be low on the Street going forward as lower gross margins and revenues take their toll.”
In the pre-market trading session, Analog Devices (ADI), a competitor of Texas Instruments (TXN), experienced a decline of 0.8%.
The consensus among analysts is that Texas Instruments (TXN) should be cautiously approached. Seeking Alpha authors have given it a HOLD rating, and analysts at Wall Street have also given it a HOLD rating. On the other hand, Seeking Alpha’s quantitative approach, which routinely outperforms the market, assigns a HOLD rating to TXN.