Credit Suisse First Boston upgraded Texas Instruments (TXN ) to buy.
Analyst Charlie Glavin says Texas Instruments will see a bottom in Q4 results or Q1 2002 results as macro conditions improve. He expects the company's gross margins to expand from mid-20% level to high 40% over the next two years. Texas Instruments has historically risen in sync with margin expansion (77% correlation), and Glavin thinks it will likely exceed prior peak operating margins (23.7%) and reach the 25% level during this cycle, thanks to: early cuts in capital expenditures, the shutting of two fabrication plants a move to 300mm for digital signal processors, an upgrade of three analog plants to 200mm, an 18% cut in jobs and a better product portfolio. He notes Texas Instrument is trading at 20% discount to Intel and Analog Device. Glavin sees a $0.10 2002 loss, and $0.33 2003 EPS.