Can Analog Segment Drive Growth For Texas Instruments In Q2?

by Trefis Team
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Texas Instruments (NYSE: TXN) is expected to publish its Q2 2018 results on July 24. The company has reported strong revenue growth from both the Analog and Embedded Processing segments in recent years. This trend continued in the first quarter of 2018, with net revenues growing at 11% year-on-year to $3.8 billion. Analog segment revenue was up 14% year-on-year to $2.6 billion, while Embedded Processing segment revenue grew 15% year-on-year to $926 million. Continued tailwinds in the automotive and industrials markets should boost the company’s Q2 earnings. We expect this to continue through the end of the fiscal year, with net revenues forecast to increase at similar rates. Below, we take a look at what to expect when the company reports earnings.

We have a price a $107 price estimate for Texas Instruments, which is slightly lower than the current market price. The charts have been made on our interactive dashboard on Texas Instruments. You can modify the different driver assumptions, and gauge their impact on the earnings and price per share metrics.

Factors That May Impact Future Performance

TI’s Analog segment enjoyed a strong Q1, as margins improved as a result of revenue growth. This was driven by increased demand for chips from automakers for autonomous and semi-autonomous vehicles, as well as other technological advancements. Texas Instruments, with a 19% market share, is the leader in the Analog semiconductors market and is well positioned to increase its share over time. The Analog segment holds substantial growth potential for TI, as a result of the aforementioned demand for chips from automakers, coupled with strong demand in the industrial segment. Both markets are increasing their use of semiconductors, which should provide significant growth opportunities for TI. In addition, the planned installations of 5G wireless networks later this year, and eventual further expansion across the U.S., should result in strong demand for Texas Instruments’ equipment, leading to significant growth over the next few years.

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