Texas Instruments' Q4 Gross Margin Beat Was a 'Positive Surprise', Morgan Stanley Says

MT Newswires Live01-29

Texas Instruments' (TXN) better-than-expected Q4 gross margin of 55.9% was a "positive surprise," even as the company's margins have remained near decade lows and continue to face pressure from the long-term capital expenditure cycle, Morgan Stanley said in a Wednesday note.

The company's capex of $2 billion to $3 billion for 2026 is above depreciation, Morgan Stanley said, adding that if next year, the capex falls to minimum "maintenance" levels approaching mid single digit percentage of revenues, Texas Instruments could see free cash flow about $1 above EPS.

Texas Instruments' Q1 EPS and revenue guidance ranges of $1.22 to $1.48 and $4.32 billion to $4.68 billion were above Morgan Stanley's and the consensus' estimates at the midpoint at $4.48 billion and $1.32, and $4.42 billion and $1.26, respectively.

Morgan Stanley also raised its fiscal 2026 EPS and revenue estimates to $19.02 billion and $6.08 from $18.90 billion and $6.04, and fiscal 2027 estimates to $19.99 billion and $6.94 from $19.87 billion and $6.90.

The firm adjusted its price target on Texas Instruments to $180 from $175 and maintained its underweight rating.

Price: 212.60, Change: +15.97, Percent Change: +8.12

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