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BofA Upgrades Texas Instruments to Buy'


Banc of America upgraded Texas Instruments (TXN) to buy from neutral.

The microchip producer posted six cents earnings per share vs. a loss of six cents (pro forma) on a 20% revenue rise. Analyst Doug Lee says this is the first time in two years that he's confidently recommending the purchase of Texas Instruments' shares. He says the upgrade is based on fourth quarter upside, a confident near-term outlook, and abatement of wireless inventory concerns.

Also, he says the Philadelphia Stock Exchange's Semiconductor Sector Index, or SOX, has rebounded 40% off its October 2002 low, yet the company's shares are up only 9% over the same period. Lee says Texas Instruments generated $1.2 billion in free-cash flow in 2002, corresponding to its trailing 12-months free-cash flow yield of 4.8%. He raised his 22 cents 2003 earnings per share (GAAP) estimate to 40 cents, and upped the 75 cents 2004 estimate to $0.80. Lee has a $20 target.


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