Texas Instruments is well know for its calculators.
Hannah Reyes Morales/Bloomberg
Texas Instruments dropped a few breadcrumbs about the global chip shortage when it served up first-quarter results. But Wall Street isn’t quite sure what to think.
In one breath, company executives told analysts that chip sales are so robust—up 25% for auto chips—that they plan to increase manufacturing capabilities through the first half of 2022.
A little later, though, they offered up a second-quarter forecast that doesn’t appear to support the claim that chip demand is going to stay high.
Most of the semiconductor company’s products—analog and embedded processors for everything from automobiles to gadgets—had steady lead times in the first quarter, investor relations head David Pahl said on Tuesday’s earnings call. “However, the growing demand …did expand our list hot spots which required extending some lead times,” he said.
Then came the forecast, which seemed to counter the demand argument. TI expects revenue of $4.13 billion to $4.47 billion in the second quarter; analysts had estimated $4.16 billion before Tuesday’s earnings report. First-quarter revenue came in at $4.29 billion.
If second-quarter revenue comes in at the high end, that would be a 4% gain. Typically, second-quarter revenue would see mid- to high single-digit sequential growth, according to Raymond James analyst Chris Caso.
So, the forecast didn’t quite add up for Caso. When asked about the number, Pahl said: “It is the best estimate that we have for our revenue for the quarter. And again, I would describe it as following a very strong first quarter, it will be a strong quarter again.”
Caso wrote: “We’re going to chalk up the guidance to conservatism—and that will become clearer as more companies report over the next two weeks.” He reiterated his $220 target price and equivalent of a Buy rating on shares.
Of the analysts that cover TI, 16 rate it a Buy, 10 have a Hold rating, and six call it a Sell. The average target price is $201.07, which implies upside of about 10%.
Investors appeared disappointed with the results overall—adjusted earnings of $1.85 a share on revenue of $4.29 billion, slightly better than Wall Street’s expectations of $1.57 and $4 billion. The chip maker’s stock down 4.1% to $182.45 in afternoon trading, as the PHLX Semiconductor index, or Sox, fell 1.4%.
Write to Max A. Cherney at [email protected]
