Texas Instruments Hits An Inflection

Texas Instruments $TXN ( ▼ 0.92% ) is getting a fresh boost from UBS $UBS ( ▼ 2.1% ), which says the company’s free cash flow has reached a key inflection point.

The bank maintained its Buy rating and raised its 12-month price target to $260 from $245, pointing to improving fundamentals.

The call follows better-than-expected guidance for the current quarter, which helped lift shares. UBS argues that the market is starting to refocus on the metric that has historically mattered most for Texas Instruments.

Texas Instruments now expects earnings between $1.22 and $1.48 per share for the quarter, with the high end above consensus estimates.

Revenue guidance of $4.32 billion to $4.68 billion also tops expectations at the upper range.

UBS analyst Timothy Arcuri said the improving outlook reinforces his view that free cash flow is set to accelerate as capital expenditures roll off over the next several quarters.

Arcuri noted that Texas Instruments is already annualizing about $6 per share in free cash flow, which UBS estimates could rise meaningfully as capex declines.

Historically, TXN’s stock performance has tracked free cash flow more closely than margins.

Additional upside could come from further commentary at the company’s upcoming Capital Management call.

UBS believes clearer visibility into cash generation could keep momentum building.