Texas Instruments stock slips after Bernstein downgrade
Texas Instruments (TXN) was downgraded by Bernstein from "Market Perform" to "Underperform," citing the company's "longer investment horizon" as it increases spending. There are slo concerns about the company's margins. Yahoo Finance Live breaks down the story.
Video Transcript
RACHELLE AKUFFO: And also taking a look at Texas Instruments. They were hit with a downgrade from Bernstein this morning from market perform to underperform, citing the company's quote, "Longer investment horizon," as it raises its spending. I mean, a lot of focus also on what we're looking at with gross margins. I mean, Rasgon saying that, look, it's likely headed towards a 60% level or worse in short order.
So a lot of concern here coming out of that note and really wondering what the long-term plan is. And I think people are going to want to hear a lot more details before they sort of get behind this company at the moment. But looking at the numbers, it's at the lower end of the street as far as gross margins and revenues also taking a toll as well. So we're seeing this very, very cautious attitude around them over the past week. As we can see, they're down about 1.6%. But as we look at the past three months, it's been a roller coaster for them this summer.
And you figure with back-to-school spending as well, perhaps they should see some pickup that will show up in their later-on earnings. But for now, really under pressure at the moment.
BRAD SMITH: Are you talking about that TI-84 Plus Calculator? I love a shout-out for the good old graphing calculators out there. Look to shout-outs, though, as well or to call-outs from this note. They said the street models do not appear to contemplate the consequences of Texas Instruments plans, and gross margin expectations appear far too high for us. It seems highly likely to us that gross margins are headed towards the 60% level in short order or worse, well below current expectations here.
So that alluding to part of what you were saying a moment ago, Rachelle, and they went on to say we're not suggesting Texas Instruments is wrong or bad in their strategy. They just have a longer investment horizon than most other companies. However horizon also likely longer than many investors have as well here. And so, they are taking a look at Texas Instruments as compared to some of the other semiconductor stocks and the price action in the markets here today. Texas Instruments the worst performer, at least, of that bunch pictured here on screen right now.
