The stage is set for Texas Instruments to see big gains after issuing strong quarterly guidance and reporting an earnings beat, according to Bank of America. The bank’s research arm raised its rating on the semiconductor name to buy from neutral. It also hiked its price target on shares to $320 from $235, implying 35.4% upside from Wednesday’s close. Texas Instruments on Wednesday posted better-than-expected earnings and revenue for the first quarter, sending shares soaring 9% ahead of Thursday’s open. The company also said it sees Q2 earnings per share in a range of $1.77 to $2.05. That’s well above a FactSet consensus of $1.57 per share. Analyst Vivek Arya said these numbers increase his confidence in Texas Instruments’ ability to “1) Benefit from industrial resurgence, including in aero/defense ($1bn+annual business), 2) Take advantage in data-center build (11% of sales, up 90% YoY), 3) Leverage the last 3 years of capex in US-fabs to potentially gain share in an ‘everything-is-constrained’ chip environment. The company also expects to bolster its balance sheet as it continues with its $60 billion buildout of semiconductor manufacturing in the U.S. As part of that plan, Texas Instruments is aiming to fund seven U.S. semiconductor fabrication facilities across three mega-sites in Texas and Utah, the firm said last June in a statement . “TXN’s high quality assets and US-based manufacturing capacity position it well within a constrained chip environment,” Arya wrote. “Now that TXN is past its big capex investment cycle, we expect significant [free cash flow]/share growth driven by accelerating sales on industrial and data center power strength.” Bank of America’s call goes against consensus on the Street. Of the 40 analysts covering Texas Instruments, 22 have a hold on the stock, while just 14 have a buy or strong buy on it, per LSEG. Shares have jumped 55% over the past year.
