Texas Instruments a Better Pick Than Intel - Citi

Texas Instruments (TXN) shares are higher this morning after Citigroup’s Glen Yeung raised his rating on the stock to Buy from Hold. TXN was also added to Citi’s “Top Picks Live” list, replacing Intel (INTC), which remains Buy rated.

Yeung ups his Q2 EPS estimate by a penny to 46 cents. For 2008, he goes to $1.99 from $1.86; for 2009, he now sees $2.24, up from $2.16. And for 2010, he now expects $2.45, up from $2.12. Yeung raised his price target on the stock to $39, from $31.

Yeung writes that the estimate increases reflect “increased optimism in TI’s handset revenue opportunity.” He contends that the company is seeing “a significant increase in chip orders” in the second half over the first half, driven by new product launches and depleted inventories. He sees second half DSP sales up 18%, versus a normal seasonal increase of 13%, and that “consensus estimates should rise as this ramp comes to light.”

Also, Yeung says that the company is holding on to market share at Nokia (NOK) better than anticipated, with low-end share loss pushed out and EDGE share loss delayed. He adds that the company has a chance to win analog business at Nokia. “We believe that these issues are not well reflected in current consensus and contribute to our confidence for estimate increases,” he writes.

Comments

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Glen Yeung has also had a Buy on SPSN stock since shortly after it IPO'd (stock at mid-teens). He still has a buy on it - it's at 2.88 as I write this. If he likes it at $15 he must really love it at $3. I'm waiting for him to put out a "strong buy" when they go bankrupt.

2008 May 19 12:23 PM