Zacks Investment Research downgraded shares of Texas Instruments, Inc. (TXN) from NEUTRAL to UNDERPERFORM on July 25, 2012, with a target price of $24.00.
TI is one of the largest suppliers of analog and DSP integrated circuits. June quarter earnings exceeded the Zacks Consensus, although guidance was disappointing due to increased caution at distributors and reduced visibility. Therefore, the company's compelling product line, market share gains and strategic refocus notwithstanding, we think the shares deserve a lower multiple because of the uncertainty in demand and TI's significant capacity that will pressure earnings. The debt level also appears high, increasing the risk profile. We therefore downgrade the shares from Neutral to Underperform.
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