BofA Securities on Wednesday moved Texas Instruments (NASDAQ:TXN) off its Underperform list, assigning the stock a Neutral rating and boosting its price target to $235 from $185. The revision followed the semiconductor company's fourth-quarter report and a first-quarter outlook that the bank judged stronger than the market had anticipated.
Texas Instruments posted results that were in line with expectations for the fourth quarter, while reporting stronger gross margins, attributed to a favorable industrial mix. The company also recorded improved free cash flow that BofA said reflected tighter capital expenditure control.
Management set a first-quarter revenue guide with a $4.5 billion midpoint, which equates to a 2% increase quarter-over-quarter and an 11% gain year-over-year. BofA pointed to that top-line guidance as a central reason for its more constructive stance.
The analyst team at BofA highlighted several drivers behind the upgrade:
- Improving backlog and stronger order trends across end markets.
- Strength in data center demand, which the note quantified as 9% of sales and up 64% year-over-year in calendar year 2025.
- The potential for continued free cash flow growth, supported by management's capital discipline.
Reflecting this view, the firm raised its earnings per share estimates for calendar years 2026 and 2027 by 8% and 7%, respectively, to $6.23 and $7.12. BofA also lifted its free cash flow per share forecasts by 14% and 15% for the same years, to $7.13 and $8.20 per share, moving those projections closer to the company's longer-term target range of $8 to $12 per share.
BofA singled out an upcoming capital management event scheduled for February 2024 as the next significant catalyst for the stock.
Despite the constructive elements, the Neutral rating reflects a balanced assessment: while free cash flow dynamics are improving, Texas Instruments' top-line growth is projected to run below many peers. BofA noted TXN's expected growth of roughly 8-10% compared with peer groups that are achieving double-digit sales expansion. That relative growth differential underpins the more cautious stance even amid stronger cash generation.
Analyst activity and product news at Microchip
The report also summarized recent analyst moves and product announcements at Microchip Technology. BofA upgraded Microchip from Neutral to Buy and raised its price target to $95, citing improving recovery momentum and higher estimates. Stifel raised its price target to $90, and Piper Sandler increased its target to $85, with these firms pointing to Microchip's diversified business model and strengthening order momentum, particularly in industrial end markets.
On the product front, Microchip expanded its maXTouch M1 family of touchscreen controllers to support a broader range of automotive displays, including emerging panel types such as OLEDs and microLEDs. The company also introduced a new 600V gate driver portfolio targeted at high-voltage power management applications, offering multiple configurations and current drive options. These developments were presented as part of Microchip's efforts to broaden its product set and address diverse end-market needs.
For investors seeking additional valuation context and company-level health metrics, the piece noted that tools such as comprehensive Fair Value assessments and financial health scores are available through InvestingPro.
The coverage reflects BofA's updated model assumptions and explicitly ties near-term upside drivers to cash generation, backlog recovery, and the timing of corporate capital actions, while flagging TXN's growth profile relative to peers as a restraint on a more positive rating.