UBS believes that Texas Instruments ‘ free cash flow has now reached an inflection point. The bank maintained its buy rating on the semiconductor stock and lifted its 12-month price target to $260 from $245. That is approximately 32% above Texas Instruments’ current valuation. The change comes after the company issued better-than-expected guidance for the current quarter, sending shares up 7% in the premarket. TXN 1Y mountain TXN 1Y chart Texas Instruments now sees its earnings coming in between $1.22 and $1.48 per share, with the higher end of this range above the $1.26 analysts polled by LSEG expected. The company expects revenue between a range of $4.32 billion and $4.68 billion, with the high end also above the $4.42 billion consensus estimate. UBS analyst Timothy Arcuri noted that his price target increase comes at a time when Texas Instruments’ free cash flow is about to inflect. The analyst added that historically, this has been the most important metric. “Specific to TXN, it is already annualizing ~$6/share in FCF which we think is more like ~$8.5 when adjusting for capex coming down substantially over next 4-6 quarters based on TXN’s commentary,” he wrote. “From this baseline, it is no longer hard to see how FCF could approach $10/share this year and ~$12/share next year with revenue only growing mid-teens/yr in C2026E/2027E and we have shown many times that this stock is more correlated to FCF than gross margin.” An additional catalyst could come from further positive commentary about free cash flow in another month at the company’s annual Capital Management call. Arcuri expects this will support some of his numbers.