Jefferies has 3 reasons why Texas Instruments can be a winner again this year

Published Mon, Jan 22 20183:50 PM EST

Jefferies just added Texas Instruments to its Franchise Pick List, telling clients that there are numerous ways to win on the chipmaker stock. As one of the top performers in the S & P 500 over the past 12 months, Texas Instruments has climbed 59 percent versus the market's 24 percent gain. But analyst Mark Lipacis advised investors Monday that several key catalysts could be the party going a while longer. For his part, Lipacis sees the company's shares rising 28 percent to $150 over the next 12 months from Friday's close. Here are three key drivers for Texas Instruments growth in 2018. 1) Secular demand "We've argued that the value in the internet of things device is not just collecting data locally, but also in transmitting that data to the cloud for processing, increasingly using artificial intelligence technology like neural networking. By feeding the results of the analysis done in the cloud from many internet of things devices back to the devices themselves, the utility of those internet of things devices increases. This, in turn, creates a virtuous circle of demand for the internet of things devices. This is why we believe that internet of things devices, enabled by Artificial Intelligence in the cloud, will reach into the 10's of billions of unit shipments annually." 2) Cyclical Demand from industrial capital expenditure "For the past year in his series of 'Philly Fed' notes, Jefferies Global Equity Strategist, Sean Darby, has argued that the U.S. was entering a 'budding CapEx cycle.' Darby observes that the Philly Fed 6- month CapEx Forecast Survey has been a good 12-18 months leading indicator for U.S. CapEx. He also observed that this survey bottomed in 2016 and is now at the highest reading in over 15 years." 3) Tax reform "The new tax law lowers the corporate tax rate to 21 percent from 35 percent. We think this will benefit companies with revenues that originate predominately in the U.S. or companies that repatriate offshore profits, like Texas Instruments. Texas Instruments provides for the highest tax rate in our semiconductor universe of coverage and believe that it has the most to benefit with lower US tax rates. We believe that Texas Instruments's earnings per share could increase by 10-15% once the new tax corporate tax rate is reflected in estimates." —CNBC's Michael Bloom contributed to this report.

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Jefferies just added Texas Instruments to its Franchise Pick List, telling clients that there are numerous ways to win on the chipmaker stock.

As one of the top performers in the S&P 500 over the past 12 months, Texas Instruments has climbed 59 percent versus the market's 24 percent gain. But analyst Mark Lipacis advised investors Monday that several key catalysts could be the party going a while longer.

For his part, Lipacis sees the company's shares rising 28 percent to $150 over the next 12 months from Friday's close.

Here are three key drivers for Texas Instruments growth in 2018.