Citi Research analyzed analog semiconductor companies based on each one’s exposure to various end markets, finding Texas Instruments (NASDAQ:TXN) to be under the most pressure due to its heavy exposure to a weak automotive end market.
Citi lowered its target price on Texas Instruments to $235 from $250 and lowered its earnings per share for the upcoming fiscal year to $6.66 from $7.33.
“We are trimming estimates on Buy-rated Texas Instruments as the analog upturn has not begun as fast as we expected,” said Citi analysts, led by Christopher Danely, in a Thursday research note. “We believe the tariff war is causing the supply chain to hold back on capacity and inventory and as a result, customers will hold off on building inventory until the last second.”
Citi considers auto as the weakest end market and industrial as the strongest. The auto market accounts for 30% of Texas Instruments sales, while industrial accounts for 36%. However, Microchip Technology (NASDAQ:MCHP) only receives 16% of its revenue from the auto sector and 48% from industrial.
Citi retained its Buy rating and $90 price target on Microchip Technology. However, they still lowered its upcoming fiscal year EPS estimate to $3.43 from $3.62.
“We are trimming estimates on Buy-rated Microchip as the analog upturn has not begun as fast as we expected,” Danely noted. “We would note our F26 EPS estimate is still 38% above Consensus and we still expect Microchip to exhibit the strongest print/guide given its 60% exposure to the Industrial/Data Center end markets.”
Microchip Technology and Texas Instruments were up 0.9% and 0.5%, respectively, during Thursday market trading.