Analyst Note| Brian Colello, CPA |
Texas Instruments reported impressive second-quarter results with the top and bottom lines exceeding our expectations. The company continues to foresee chip demand in excess of supply, which TI hopes to address by adding incremental capacity in the coming quarters. Third-quarter guidance was for flattish revenue and was in line with CapIQ consensus estimates. It’s possible that TI’s third-quarter guidance is conservative once again, as revenue exceeded the high end of TI’s prior guidance for the fifth straight quarter, but as the chip industry strives to reach supply-demand balance, we don’t foresee these good times for TI (or its peers) lasting forever. We will maintain our $166 fair value estimate for wide-moat TI. Even with shares down about 4% after hours (likely based on the forecast for flattish sales next quarter), we still view shares as modestly overvalued.