Texas Instruments Stock Is Downgraded as Margins Are Seen Declining

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Texas Instruments 486DX2 Processor on Motherboard

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Shares of Texas Instruments fell on Friday after Citi downgraded the chipmaker and cut its price target on concerns about a drop in margins.

Citi lowered its rating on Texas Instruments (ticker: TXN) from buy to neutral and lowered the price target from $220 to $187 per share.

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Shares of Texas Instruments fell 1.7% to $183.60 in premarket trading on Friday.

Analyst Christopher Denly said he expects margins to decline “due to increasing depreciation and the acquisition of a fab.” He sees gross margin negatively impacted by about 1% to 3% in 2022. Danley’s gross margin estimate is 65.9%, which analysts said falls short of Wall Street’s consensus.

Analysts surveyed by FactSet forecast a gross margin of 67 per cent in 2022.

“We believe TXN stock will be underperforming as margins are lower compared to other quasi companies where margins are growing,” the analyst wrote in a note Friday.

Write to Karishma Vanjani at [email protected]

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