In a note to clients, CIBC analysts Allan Mishan and Rick Schafer upgraded Texas Instruments to Sector Outperformer, noting long term optimism on TI's revenue growth opportunities as well as expanding margins. Highlights include:
* In wireless, TI's strongest footprints are in UMTS and at the low end, the two fastest growing segments. TI's success in application processors is well known; in 2006 TI is looking to push further into periphery opportunities like mobile TV, Bluetooth, Wi-Fi, and GPS.
* TI's high performance analog business has been gaining share, and with distribution inventories low, is likely to contribute to revenue and margin growth. We think analysts are being too cautious regarding inventories, which should be a tailwind for some time, we think.
* The margin picture is also strong with the sale of Sensors and the lower depreciation hitting in the next two quarters. Estimates could prove conservative, and we find the stock attractively valued, given the strong growth and profitability we are expecting in 06 and 07.
