TXN - Texas Instruments: Not The Time To Buy (Rating Downgrade)

2024-06-12 04:21:37 ET

Summary

• Texas Instruments excels in semiconductors, focusing on design and manufacturing, but lacks a moat like TSMC or Nvidia. Its niche in analog makes it a compelling investment despite strong competition.
• TI has the highest net income margin among peers over 5 years, driven by analog profitability. Though recently lagging in revenue and EPS growth, its future growth prospects are strong.
• TXN stock appears overvalued with a -48% margin of safety in my analysis. However, considering historical valuation multiples, it may be less overvalued over the long term.
• TI must avoid being outcompeted by TSMC and Nvidia. Specializing in analog offers potential, but high manufacturing capex reduces agility and limits the ability to capitalize on market trends.

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