Texas Instruments: Color on Qtr
- Cowen & Co lowers tgt to $77 from $82. While certainly not a thesis changing event, guide was abnormally wide and below seasonal at mid-pt. Autos remain an ongoing concern, but TXN is not MXIM in this regard (e.g. not as over-exposed) and GM still has a lot of headroom - a rarity in semis. With guide, firm cannot help but wonder if TXN is simply being conservative on its outlook, given a book-to-bill >1x, or instead anticipates a cooling off from the very strong growth rates seen YTD in semis. The last time TXN guided Q2 below was 8 quarters ago, but the difference today is that comms infrastructure has held up better, TXN has much better consumer electronics exposure and FX is not the headwind it once was.
- RBC Capital raises tgt to $95 from $84. TXN reported another impressive beat & raise and firm sees the potential for sustained EPS upside through CY17 driven by -- robust organic growth, AAPL ramps, gross-margin upside and potential tax-reform tailwinds. Not only, is TXN on-track to see 10%+ organic growth in H1 but the company noted that channel inventory and lead-times both remain fairly balanced, suggesting much of the uptick is end-demand driven and not channel driven.
- Stifel Research notes TI's March q revenue came in at $3.4bn, which was at the high-end of the revenue guidance, with q/q demand again strong for both Automotive and Industrial; Communications was up slightly q/q, Enterprise was roughly flat q/q, and Personal Electronics (PE) was down q/q as expected seasonally. GM's reached 63.0% in the quarter (new record) and EPS beat Street consensus estimates. GM was up 54bps to 63.0% (new record) reflecting mix, manufacturing efficiencies and continued progress towards 300mm transition.