Texas Instruments: Upgrades Ahead of Monday’s Mid-Quarter Update

Texas Instruments (TXN) received a pair of upgrades Friday ahead of a planned mid-quarter financial update scheduled for Monday.

Cody Acree, an analyst with Stifel Nicolas, raised his rating to Buy from Neutral, setting a $40 price target:

We now believe the inventory correction is largely complete and that TXN’s shares, which are trading at just 17x our FY 08 estimates, fully reflect the correction as well as the increasing competition and recent disappointments of the wireless market. We believe TXN will begin to point to improving business trends during its mid-quarter update.

Acree thinks the company will leave the mid-point of its guidance unchanged, but might narrow the range:

More importantly, we expect the firm to echo the encouraging order trends recently heard from several companies including Analog Devices (ADI), Microchip (MCHP), Marvell (MRVL) and now National Semiconductor (NSM). We expect the restocking of the analog supply chain to be a gradual occurrence throughout 2007, compounding TXN’s growth as we also look for the company to continue to gain analog share.

Acree boosted his FY 2007 EPS estimate to $1.58 a share from $1.51. For 2008 he goes to $1.86 a share, from $1.69.

Krishna Shankar, an analyst with JMP Securities, Friday boosted his rating to Market Outperform from Market Perform, establishing a $36 price target. He likewise expects an upbeat update on Monday; he thinks the company will adjust its projected first quarter EPS estimate from a range of 28-34 cents a share to a range of 30-34 cents. Shankar upped his own Q1 EPS estimate to 32 cents a share from 31 cents; for 2007 he goes to $1.65 from $1.60, and for 2008 he goes to $2 from 1.95.

Shankar says his more bullish stance reflects “improving end market demand, a gradual end to the current industry inventory correction, [and] renewed growth in high-end cell-phone, analog and consumer applications.”

Friday, Texas Instruments shares were up 68 cents at $32.38.

Previously: Texas Instruments: Analog Chip Demand Bottoming

TXN 1-yr chart