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TI (TXN) Earnings Preview

by | Jul 18, 2021

TI (TXN) reporting earnings on Wednesday 7/21 after the close with the Street looking for $1.85 on $4.358B in sales. Next quarter is guided to $1.97 on $4.58B in sales while the FY is $7.45 and $17.54B, a 21.3% increase Y/Y. Shares have traded lower in four straight with an average closing move of 4.5% and a max move of 7.48%. The current implied move is 3.22%. Options flow has been mixed recently but does have a lot of large bullish positions in longer-dated expirations including a buyer in the January $180 calls and put sales in the June 2022 $175 and $150 strikes. On the chart, TXN is very coiled on a weekly timeframe under $195 and above the $181.50 level. A breakout has room to run at new highs to $205. A sell-off of around 5% would target the 200-day at $173. The $170B company trades 23.68X earnings, 11X sales, and 25.5X cash with a 2.2% yield. TXN is benefiting from a recovery in the industrial markets while automotive remains challenging given the ongoing challenges coming out of the pandemic. They have been adding incremental capacity throughout the year with more 300mm wafer fab coming online next year and a recent $900M buy of Micron’s Lehi, Utah semiconductor factory. Analysts have an average target for shares of $194 with a Street High $240. Citi raising estimates last week citing continued automotive and industrial strength and expects the stock to trade higher following its earnings report on earnings upside combined with low sentiment. Keybanc raising their target for shares on 7/6 as feedback from the supply chain regarding a concerted push to drive increased EV adoption in China and alternative energy should support outsized consumption of power semiconductors and should be a tailwind for TXN. Short interest is 1.5% and down recently from around 2%. Hedge fund ownership fell 2.5% in Q1. In February, a director bought $1M in stock on the open market at $166.91, the largest open market buy in some time.

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