Texas Instruments Inc (NYSE:TXN)’s (TI) second-quarter 2023 financial results were “status quo,” with the global semiconductor company seeing weakness across all end-markets, according to Baird Equity Research analysts.
In an update to clients, they also noted the company’s 3Q guidance reflects a sequential decline in gross margin, attributable primarily to capacity increases (depreciation and costs related to added capacity) according to management.
"This represented the negative surprise of the quarter, as it will bring concerns around whether an ongoing ramp will continue to negatively impact utilization rates and yields," the analysts wrote.
Nevertheless, they’re modeling a gross margin trough for TI in 3Q even as cancellations remain at elevated levels, due to customers continuing to work down inventories, and near-term weakness in end demand means customers are not yet coming back to ordering patterns.
Analysts did note, however, that demand remains strong ini TI's Automotive segment.
Baird reiterated its ‘Neutral’ rating on TI stock with a target price of $180.
Shares of Texas Instrument fell 5% to $176.45 in late-afternoon trading on Wednesday while gaining 8% year to date.
Contact Sean at sean@proactiveinvestors.com