Texas Instruments price target lowered to $160 by Bernstein on Q3 results

Bernstein SocGen Group reduced its price target for Texas Instruments (TXN) to $160 from $180, maintaining a Market Perform rating, following the company's third-quarter results which saw revenue slightly exceed but EPS marginally miss analyst expectations. The adjustment reflects a slower-than-anticipated recovery across end markets and slightly lower-than-expected gross margins. Concurrently, Evercore ISI also lowered its price target to $226 due to December quarter guidance impacting EPS projections, while Benchmark reiterated a Buy rating. These analyst actions, coupled with broader semiconductor sector declines stemming from U.S.-China trade tensions, indicate a more cautious outlook for TXN despite its strong fundamentals and leadership transition.

Analysis

Texas Instruments (TXN) reported Q3 revenue of $4,742 million, slightly exceeding Street expectations of $4,655 million, though EPS of $1.48 marginally missed the $1.49 estimate. Bernstein SocGen Group subsequently reduced its price target to $160 from $180, maintaining a Market Perform rating, citing a slower-than-expected recovery across end markets and slightly below-expectation gross margins due to lower utilizations. This cautious stance is echoed by Evercore ISI, which also lowered its price target to $226 from $236 following December quarter revenue guidance that led to EPS projections falling 11% below analyst estimates.

Despite the tempered outlook, TXN demonstrated varied segment performance, with Communications Equipment growing 45% year-over-year and Enterprise Systems increasing 35% year-over-year, while Industrial saw 25% YoY growth. The company maintains strong fundamentals, evidenced by a healthy current ratio of 5.81, a gross profit margin of 58.03%, moderate debt levels, and an impressive 22-year streak of consecutive dividend increases. This financial resilience provides a buffer against market headwinds.

The broader semiconductor sector, including TXN, has experienced declines following China's investigations into the U.S. chip sector, indicating geopolitical risks are impacting valuations. Benchmark, however, reiterated a Buy rating with a $220 price target, emphasizing TXN's focus on increasing free cash flow per share. Additionally, the upcoming leadership transition, with Haviv Ilan assuming the Chairman role in January 2026, signals strategic continuity.

Key Decisions for Investors

• Monitor TXN's end-market recovery pace and utilization rates, as these directly impact gross margins and future guidance.
• Evaluate the impact of ongoing U.S.-China trade tensions on the broader semiconductor sector and TXN's specific operations, considering potential supply chain disruptions or demand shifts.
• Assess the long-term implications of TXN's strong fundamentals, including its dividend growth and free cash flow generation, against the backdrop of reduced analyst price targets and a premium P/E valuation of 33.05.