This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Texas Instruments Flashes Cash, Analysts Hike Price Targets

NEW YORK (TheStreet) -- Texas Instruments' (TXN - Get Report) decision to hike its free cash flow target has prompted analysts to raise their price targets for the semiconductor maker.

On Thursday, Texas Instruments held a Webcast to update its Capital Management Strategy, and raised its targeted free cash flow range to 20% to 30% of revenue. Previously, the Dallas-based firm had targeted 20% to 25% of revenue. Texas Instruments sees "quite a bit of room" to continue buying back shares, reported.

Analysts welcomed the new free cash flow target. Jefferies, which has a 'buy' rating on the company, raised its price target to $52 from $50 following the announcement. Companies such as Intel (INTC), On Semiconductor (ONNN) and Xilinx (XLNX) could make similar moves, according to Jefferies analyst Mark Lipacis.

"We believe investors will continue to reward companies that emulate TXN's best practices with premium multiples, just as they have with TXN. We think INTC, ONNN, and XLNX are best positioned to surprise on capital return, he wrote."

BMO Capital Markets also raised its Texas Instruments price target to $50 from $43. "We continue to rate TXN outperform," wrote BMO analyst Ambrish Srivastava, noting that the new strategy is a sign of confidence in Texas Instruments' business model.

Must Read: World Wrestling Entertainment Not in Merger Talks With AMC Networks

Free cash flow is crucially important for generating healthy dividends and share repurchases. Texas Instruments' free cash flow for the full year of 2013 was $3 billion, or 24% of revenue. The company returned just over $4 billion to shareholders in the form of dividends and share repurchases during fiscal 2013.

"Yesterday, Texas Instruments held a conference call to discuss its capital management strategy," wrote J.P. Morgan analyst Christopher Danely, in a note released on Friday. "TI continues to demonstrate secular increases in margins and an outstanding payout ratio, as the company raised its target free cash flow margin range and modified its 100% payout ratio target to include proceeds from equity exercises."

J.P. Morgan reiterated its 'overweight' rating on Texas Instruments, citing the company's "superior margin and earnings leverage".

In recent years Texas Instruments has shifted its focus away from legacy wireless offerings, towards more lucrative analog and embedded processing products. The chipmaker beat Wall Street's revenue forecast in its fourth-quarter results in January, but announced large job cuts in its Japanese operations and its Embedded Processing business.

In an interview Texas Instruments CFO Kevin March told TheStreet that the job cuts were born out of the company's need to shift resources to faster growing areas.

Shares of Texas Instruments have climbed 27.49% over the last 12 months, but were off 1.04% at $44.52 in pre-market trading.

--Written by James Rogers in New York.

>Contact by Email.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
TXN $57.27 -1.00%
AAPL $118.03 -0.71%
FB $105.41 -0.31%
GOOG $748.15 -0.02%
TSLA $229.64 5.22%


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs