Analysts at Raymond James lowered their rating on shares of Texas Instruments, citing the chip maker's spending plans

Raymond James analyst Christopher Caso and his team dropped their rating to Market Perform from Outperform and removed their target of $230 for the stock price.

The stock was up 0.54% to $165.37. It has fallen 12.3% year to date.

Texas Instruments (ticker: TXN) detailed its spending plans in a call to discuss capital allocation on Feb. 3. Caso wasn't surprised by the $3.5 billion in capital expenditures slated for 2022, "since we believe that that capacity is well-needed," he said. But he said he wasn't expecting that the company would spend $3.5 billion each year through 2025 — a percentage of revenue in the mid to high teens, based on consensus forecasts — or that the share would remain around 10% after that.

Caso said he is concerned that because this spending is occurring late in the economic cycle, it "elevates the risk to earnings and cash flow when the cycle ends." The company didn't immediately respond to a request for comment.

He predicted the increased spending will result in higher depreciation expenses and weigh on the company's margins. Growth in earnings per share is likely to slow to 13% in 2022, from 38% in 2021, Caso said.

The analyst said that while he agrees with management that the investment will generate a healthy return over a roughly 10-year period, he feels that most investors may not be able or willing to wait that long.

The company reported its fourth-quarter results late last month, with EPS of $2.27 and revenue of $4.83 billion. Wall Street analysts polled by FactSet were looking for earnings of $1.95 a share and revenue of $4.43 billion. EPS for the full year was $8.26.