Earnings Beat: Texas Instruments Incorporated Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

It's been a good week for Texas Instruments Incorporated (NASDAQ:TXN) shareholders, because the company has just released its latest quarterly results, and the shares gained 7.1% to US$175. It looks like a credible result overall - although revenues of US$3.7b were in line with what the analysts predicted, Texas Instruments surprised by delivering a statutory profit of US$1.20 per share, a notable 12% above expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Texas Instruments after the latest results.

Check out our latest analysis for Texas Instruments

Following the recent earnings report, the consensus from 30 analysts covering Texas Instruments is for revenues of US$15.7b in 2024. This implies a small 6.4% decline in revenue compared to the last 12 months. Statutory earnings per share are forecast to plummet 21% to US$5.13 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$15.6b and earnings per share (EPS) of US$5.06 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$176. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Texas Instruments analyst has a price target of US$225 per share, while the most pessimistic values it at US$115. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that revenue is expected to reverse, with a forecast 8.4% annualised decline to the end of 2024. That is a notable change from historical growth of 6.3% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 17% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Texas Instruments is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Texas Instruments' revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$176, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Texas Instruments analysts - going out to 2026, and you can see them free on our platform here.

Even so, be aware that Texas Instruments is showing 2 warning signs in our investment analysis , and 1 of those shouldn't be ignored...

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