Core Viewpoint - Texas Instruments is facing increased pressure due to macroeconomic challenges and a high valuation, leading to a downgrade by Bank of America to Underperform and a price target reduction from $208 to $190 [1] Group 1: Analyst Downgrade and Valuation - Bank of America analyst Vivek Arya downgraded Texas Instruments from Neutral to Underperform, citing global tariff uncertainty as a factor limiting industrial demand recovery [1] - Texas Instruments is trading at a premium valuation of 25x/31x P/E on calendar year 2026 estimates, which is higher than Analog Devices despite lower free cash flow [2] Group 2: Financial Metrics and Projections - The trailing 12-month free cash flow margin for Texas Instruments is currently at 9%, with potential for expansion if capital expenditure decreases from $5 billion to $2 billion by 2026 [3] - The analyst has reduced the EPS estimate for fiscal 2026 by approximately 3% to $6.05, which is 8% below consensus, and for fiscal 2027 by 3% to $6.91, which is 13% below consensus [4] Group 3: Inventory and Demand Concerns - Weak demand may lead to lower fab utilization, which could pressure gross margins, especially with current inventory levels at 231 days compared to a five-year average of 174 days [3] - Historically, Texas Instruments has provided conservative fourth-quarter guidance, typically 3% below consensus for sales and 7% for EPS [4]