11:15 AM EDT, 10/23/2024 (MT Newswires) -- Texas Instruments' ( TXN ) better-than-expected Q3 results were driven by the automotive segment, which stayed "surprisingly durable," as the industrial sector continued to show weakness, Morgan Stanley said in a note Wednesday.

The firm said, however, it expects both to reverse, with industrial forecast to see a "meaningful rebound." Concerns over demand in the automotive sector are rising particularly as original equipment manufacturers adjust their inventory strategies, Morgan Stanley said.

"Auto just does not feel like we have seen all of the negative impact of a once-in-a-generation inventory crisis," Morgan Stanley analysts said in the note.

Elevated inventories could pressure fab utilization and the December quarter guide reflects a cautious outlook on revenue and margins, the firm said. The company expects Q4 EPS of $1.18 on revenue of $3.85 billion at the midpoint, both below Morgan Stanley's forecast and consensus, according to the note.

Morgan Stanley raised the price target on the company's stock to $167 from $154 and reiterated its underweight rating.

Shares of the company were up 3.3% in recent trading.

Price: 200.45, Change: +6.48, Percent Change: +3.34