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Texas Instruments: Citi's Top Analog Pick with $235 Target

Texas Instruments Inc. (TXN) remains a top pick for Citi, which reiterates its "Buy" rating and sets a target price of $235, based on 34x 2026E EPS. The report highlights TXN's strategic positioning as it nears the end of its capital expenditure cycle, with a focus on expanding its 300mm manufacturing capacity. This expansion is expected to significantly benefit TXN when the anticipated analog inventory replenishment occurs in 2025, as sales are still down 25% from their peak.

Citi projects TXN to achieve a peak EPS of over $10, driven by potential peak sales of $20 billion, gross margins of 70%, and operating margins of 52%. The company is also expected to see its free cash flow per share grow from $1.64 in 2024 to $8-$9 by 2027, contingent on revenue growth. "TXN is our top pick within the Analog space with the most attractive risk/reward," Citi notes, emphasizing the company's robust long-term growth prospects.

The report also underscores TXN's strategic shift towards automotive and industrial markets, which now constitute 69% of its revenues, providing additional margin benefits. TXN's current stock price is $181.78, reflecting a 0.68% increase from the previous close.