Texas Instruments stock price target lowered by Evercore ISI to $226

Evercore ISI lowered its price target for Texas Instruments (TXN) to $226 from $236, while maintaining an Outperform rating, following the company's December quarter revenue guidance which projected EPS 11% below Street estimates and caused a 9% after-hours stock decline. Despite this immediate negative reaction and concerns over weakening demand noted by the CFO, Evercore ISI's continued positive stance is predicated on anticipated significant free cash flow per share growth from $3 in 2025 to $11 in 2028 and expected gross margin recovery by Q1 2026, with Benchmark also reiterating a Buy rating. This mixed outlook highlights both near-term challenges and long-term growth potential for the semiconductor firm.

Analysis

Texas Instruments (TXN) experienced a 9% after-hours stock drop following its December quarter revenue guidance, which projected earnings per share 11% below Street estimates. This immediate negative market reaction, coupled with CFO Rafael Lizardi's observation of weakening demand and declining market sentiment, highlights near-term operational headwinds for the semiconductor firm.

Despite the short-term concerns, Evercore ISI maintained an Outperform rating, albeit with a reduced price target of $226 from $236, while Benchmark also reiterated a Buy rating with a $220 target. Evercore ISI's positive stance is underpinned by TXN's historical outperformance in revenue outlooks and expectations for gross margins to bottom in Q1 2026.

A key driver for the bullish analyst sentiment is the projected significant free cash flow per share growth, estimated to rise from $3 in 2025 to $11 in 2028 as the company exits its capital expenditure cycle. Evercore ISI's $226 price target reflects a 27x multiple on its 2026 FCF per share estimate, discounted back one year, suggesting long-term value despite InvestingPro's current "slightly overvalued" assessment.

The company also declared a $1.42 quarterly dividend and announced a leadership transition with CEO Haviv Ilan becoming chairman in January 2026. Broader industry challenges, such as China's investigations into the US chip sector, remain a contextual risk.

Key Decisions for Investors

• Investors should carefully weigh the immediate negative guidance and weakening demand against the strong long-term free cash flow growth projections and anticipated gross margin recovery by Q1 2026.
• Monitor the company's progress in exiting its capital expenditure cycle and the realization of projected FCF per share growth, as these are key drivers for analyst price targets.
• Given the "slightly overvalued" assessment by InvestingPro, consider entry points that align with the long-term FCF narrative, while also observing broader semiconductor industry trends and geopolitical risks.