Recovery Talk Twirls Around TI

DALLAS (TheStreet) -- Texas Instruments(TXN Quote) may be enjoying the first fruits of a recovery: The chipmaker's third-quarter sales are said to be tracking ahead of plan, further fueling talk of a tech rebound.

The Dallas-based firm will provide a mid-quarter update after market close Wednesday, and analyst firm Broadpoint AmTech is expecting positive news.

"We believe that Texas Instruments' September quarter is benefiting from a mild broad-based recovery with sales tracking ahead of internal plan," wrote Broadpoint analyst Doug Freedman, in a note released Tuesday. "Trends in the distributor channel are likely improving, with shipments reflecting end-market pull across most business segments."

Freedman expects the chip manufacturer to raise its third-quarter revenue guidance from its initial forecast of $2.5 billion to $2.8 billion to a range of $2.7 billion to $2.85 billion. He also expects Texas Instruments to raise its earnings guidance to 34 cents to 40 cents a share, compared with its initial projection of 29 cents to 39 cents a share.

Texas Instruments' stock, which was recently upgraded to outperform by Wedbush, has risen more than 25% in the last three months and is currently trading around $25.

Freedman, however, thinks that there is plenty of room for growth. "We believe the stock continues to work over time to our $29 price target," he wrote, but he added that the firm's third-quarter operating margin could be impacted by profit-sharing.

The chip sector has already raised hopes of a tech spending rebound thanks to recent upbeat noises from Intel(INTC Quote), Dell(DELL Quote) and Marvell(MRVL Quote).