I expected Texas Instruments (TXN) to have a good third quarter, and felt even better about that when STMicro (STM) and NXP Semiconductors (NXPI) previewed good auto results and PC shipment data continued to come in strong, but I didn’t quite expect the level of performance TI actually produced. Kudos to management, and it may well be the case that the company’s decision to maintain high utilization rates (building inventory) has helped goose a cyclical recovery in the sector.
As far as valuation and stock performance goes, my view on TI last quarter was that it was a decent enough hold but not my favorite idea. With the post-earnings sell-off, TI’s performance has been basically inline with the SOX, while names I preferred more (STMicro, Renesas (OTCPK:RNECY)) have done better. TI is trading at a roughly 20% premium to the analog sector versus a long-term trailing average of a 10% premium. While I do expect that TI will see several quarters of growth in this up-cycle, as well as long-term growth in excess of the underlying markets, I have some concerns that the run over the last six months anticipated some of this.
Click here to continue:
No comments:
Post a Comment