This Chip Stock Could Be Poised for More Record Highs

TXN looks ripe for a round of upgrades, too

Deputy Editor
Oct 28, 2021 at 1:27 PM
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The shares of Texas Instruments Incorporated (NASDAQ:TXN) are inching higher today, last seen up 0.5% at $187.95. After an Oct. 25 all-time high of $202.26, gapped lower by 5% amid supply chain woes unveiled in its latest quarterly report. The silver lining is pullback has the semiconductor stock trading near a historically bullish trendline, indicating more record highs could be in store for TXN in the not-so-distant future.

Digging deeper, Texas Instruments stock just came within one standard deviation of its 200-day moving average, after spending around a year and a half above this trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, at least six similar signals have occurred in the past three years. The security enjoyed a positive return one month later in 60% of those instances, averaging a 3.6% gain for that period. From its current perch, a move of similar magnitude would put TXN at a brand new record high of $194.72. 

TXN Chart October 28

The brokerage bunch is still pessimistic towards Texas Instruments stock, leaving plenty of room for upgrades moving forward. Of the 20 analysts in coverage, 13 carry a tepid "hold" or worse rating. Meanwhile, the 12-month consensus target price of $204.93 is a 9.1% premium to current levels. 

A shift in the options pits could keep the wind at the security's back. This is per TXN's 10-day put/call volume ratio of 1.19 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 87% of readings in its annual range. Echoing this is the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.08, which sits in 91st percentile of the past 12 months. This means short-term traders have rarely been more put-biased. 

 

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