Texas Instruments Incorporated (NASDAQ:TXN) is one of the prominent semiconductor companies in the United States. With its headquarters in Dallas, TX, the company manufactures and sells embedded and analog processing chips for use in multiple industries. The stock could look attractive to long-term investors as robust industry fundamentals strengthen its prospects.
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Shares of this $151-billion company have grown 84.3% in the past five years. However, the stock lost 17.4% over the past year as supply-chain bottlenecks and cost inflation severely impacted operations in the industry. Notably, the Dow Jones U.S. Semiconductors index was down 26.2% in the past year.
On TipRanks, analysts are both cautious and optimistic about the prospects of Texas Instruments, which commands a Moderate Buy consensus rating based on seven Buys, 10 Holds, and two Sells. TXN’s average price forecast of $179.28 reflects upside potential of 10.2% from the current level. The stock’s highest price target is $230 and the lowest is $148.
Prospects Look Promising for Texas Instruments
In the years ahead, the U.S. semiconductor industry will likely get a boost as the U.S. government plans to spend $52 billion on chip manufacturing companies and provide tax credits worth $24 billion. These financial aids, coming under the purview of the CHIPS ACT of 2022, could be beneficial for semiconductor companies like Texas Instruments.
Also, diverse product offerings and international operations in at least 30 countries are a boon for Texas Instruments. Its product portfolio includes amplifiers, DLP products, data converters, microcontrollers and processors, sensors, and power management products.
Product innovation is a priority for Texas Instruments, with its new offerings being Buck converters, PWM controllers, Buck modules, humidity sensors, speaker AMPS, and precision ADCS. In the first half of 2022, the company’s research and development expenses totaled $805 million, reflecting an increase of 3.6% from the year-ago period.
Further, Texas Instruments is focused on increasing its manufacturing capabilities in the United States. In May, the company held the ground-breaking ceremony of its 300-mm semiconductor wafer fabrication plants in Texas. Requiring approximately $30 billion in investments, these plants would employ nearly 3,000 people. The abovementioned tailwinds could help strengthen the company’s prospects and enhance shareholders’ returns in the long run.
Recently, the company announced a $15-billion share buyback program and is also left to repurchase $8.2 billion shares (as of June 30, 2022) under its previous programs. Also, TXN has increased its quarterly dividend rate by 8%, which now stands at $1.24 per share. Such shareholder-friendly initiatives are expected to benefit the company going forward.
Bloggers & Top Retail Investors Are Confident about TXN’s Prospects
Per TipRanks, financial bloggers are 85% Bullish on TXN versus the sector average of 64%. Top retail investors tracked by TipRanks share a similar sentiment and have increased their exposure to TXN stock by 4.1% in the past 30 days.
Concluding Remarks
From the above discussion, it appears that the long-term prospects of Texas Instruments are very bright. Also, the company’s expertise in the field and its efforts to build growth opportunities will likely help it overcome any adverse impact from near-term supply-chain hurdles and cost inflation.
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