Texas Instruments back on line in Japan

Texas Instruments (TXN) : NYSE : US$32.67 | US$37,935.4M | Hold , Target US$32.00

Investment Recommendation

We remain at HOLD following TXN's reduction of revenue and EPS guidance last night. The shortfall was mostly attributable to weaker demand from Nokia for basebands and has little bearing on broader demand trends for analog or semiconductors in general. However, with TXN's Japan facilities coming back on line ahead of plan, shares of ON Semiconductor (ONNN : NASDAQ : $10.42 | BUY) could benefit in sympathy given infrastructure and logistics do not appear to be impeding the recovery process (ONNN also has substantial manufacturing assets in Japan through its Sanyo acquisition).

Investment Highlights

Revenue is now expected to range from $3.36 billion to $3.50 billion, revised down from previous guidance of $3.41-3.69 billion and compared to our estimate and the consensus estimate of $3.55 billion. EPS is now expected to range from $0.51 to $0.55, revised down from $0.52-0.60 and compared to our estimate and the consensus of $0.57.

Valuation

TXN’s price target of $32 is 13x our C2012 EPS estimate of $2.53, compared to an 11x multiple for our coverage universe.

Today’s summary briefs from Canaccord Genuity

  • Carrizo Oil & Gas (CRZO : NASDAQ): Raising target $4 to $50/share on higher capital spending and greater allocation toward Eagle Ford liquids; maintain BUY
  • Texas Instruments (TXN : NYSE): Reduced guidance a company-specific event; maintain HOLD, $32 target
  • Sierra Wireless (SWIR : NASDAQ): Healthy end market trends; anticipate strong H2/11; reiterate BUY, $15 target price
  • Life Sciences -- Biotechnology: ASCO '11 digest
  • Raptor Pharmaceutical (RPTP : NASDAQ): Invitation to expert call on cystinosis and RP- 103 today: Thursday, June 9, 2:00 PM ET

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For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx

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