Is TXN's Q1 forecast signaling a strong start to 2025?

Texas Instruments' (TXN) Q1 2025 forecast indicates a positive outlook for the year, supported by several key points:

1. Earnings Per Share (EPS) and Revenue: The estimated EPS for Q1 2025 is $1.06, reflecting a 11.67% decline from the same quarter last year. However, the estimated revenue for the quarter is $3.91 billion, indicating a 6.74% increase year-over-year. This suggests that while EPS is declining, revenue is growing, which is a positive sign.

2. Analyst Optimism: Citi Research is bullish on TXN, citing the best risk-reward ratio among analog semiconductor stocks. Analysts are optimistic about the analog sector's recovery, with inventory levels low, profit margins and EPS near troughs, and sales on the verge of a recovery. They expect upside revisions to consensus estimates, with sales, gross margins, and EPS returning to pre-pandemic levels, leading to an estimated 70% growth in EPS by the second half of 2026.
3. Market Position and Potential: Despite the challenges, Citi has a Buy rating on TXN, with it being the top pick among analog semiconductor stocks. The average price target from analysts is $208.91 per share, implying 15.8% upside potential. This indicates confidence in TXN's ability to capitalize on the sector's recovery.
4. Sector Recovery Signs: The analog sector's recovery is evident in the industrial end market, which is forecasting above-seasonal growth. Additionally, Microchip Technology has reported significantly higher bookings in January and February, providing further evidence of a rebound.

In conclusion, while TXN's Q1 forecast shows a decline in EPS, the growth in revenue and the optimistic analyst outlook, coupled with the potential for significant EPS growth later in the year, suggest that 2025 is likely to have a strong start for Texas Instruments.