On Wednesday, Goldman Sachs (NYSE:GS) updated its outlook on shares of Texas Instruments (NASDAQ:TXN), raising the semiconductor company's price target to $189 from the previous $176, while still maintaining a Sell rating on the stock. The adjustment follows Texas Instruments' recent capital management call, an event that the company does not typically hold at this time of year, preferring to host such updates in February.
During the call on Tuesday, Texas Instruments presented an updated capital expenditure (capex) forecast for 2026, which now ranges from $2 billion to $5 billion, a revision from the earlier estimate of around $5 billion. The company also conveyed a reduction in its long-term capital intensity outlook, attributing the change to newfound manufacturing efficiencies gained through the deployment of new tools.
Despite the enhanced capex guidance and the identification of additional efficiencies, Goldman Sachs chose to retain its Sell rating on the Texas Instruments shares. The new price target of $189 implies a potential downside of 7%. The firm acknowledged the company's proactive approach in adjusting its capacity expansion plans in response to the changing external environment.
Goldman Sachs commended the transparency and engagement of Texas Instruments' CEO, Haviv Ilan, with the investment community. In their full note, Goldman Sachs provided a brief summary of the key takeaways from the capital management call, revisions to their estimates, and an updated version of their Bull/Bear framework for Texas Instruments.
In other recent news, Texas Instruments has seen significant developments in its financial trajectory and strategic investments. UBS has reaffirmed a Buy rating on the company's stock, highlighting the potential for market share recovery in the analog sector. The company's capital management discussion noted flexibility in capital expenditures for 2026 and beyond, which could significantly boost growth.
Texas Instruments has also received an upgraded stock rating from Citi, moving from Neutral to Buy, following an improved margin outlook and a reduction in its 2026 capital expenditure forecast. Moreover, Deutsche Bank (ETR:DBKGn) adjusted its price target for Texas Instruments to $200.00, maintaining a Hold rating on the stock.
The company has planned substantial capital investments through 2026 and beyond, with a focus on increasing its free cash flow per share. Texas Instruments has outlined plans to construct three new facilities and expand its 300mm production capacity, securing up to $1.6 billion in funding from the U.S. CHIPS and Science Act for these constructions.
The company's projected free cash flow per share by 2026 is estimated to range from $8 to $12, surpassing the analyst consensus estimate of $6.91. These recent developments demonstrate Texas Instruments' strategic investments and financial performance.
InvestingPro Insights
Following Goldman Sachs' recent update on Texas Instruments (NASDAQ:TXN), it's worth noting some key metrics and insights from InvestingPro. Texas Instruments has maintained a consistent track record of dividend growth, raising its dividend for 54 consecutive years, which reflects a strong commitment to shareholder returns. Additionally, the company is trading at a high earnings multiple, with a P/E ratio of 34.9, indicating that the market has high expectations for its future earnings potential.
InvestingPro Data reveals a market capitalization of $184.93 billion, which underscores Texas Instruments' significant presence in the Semiconductors & Semiconductor Equipment industry. Despite a revenue decline of 14.5% in the last twelve months as of Q2 2024, the company's gross profit margin remains healthy at 59.36%. This profitability is further supported by an operating income margin of 36.17%.
For investors considering the long-term value of Texas Instruments, it's also important to note that analysts have revised their earnings upwards for the upcoming period, suggesting optimism about the company's future performance. For those seeking more in-depth analysis, InvestingPro offers additional tips and insights, with a total of 18 InvestingPro Tips available, including more detailed financial metrics and forecasts for Texas Instruments at https://www.investing.com/pro/TXN.
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