NEW YORK (CNNMoney.com) - Texas Instruments stock sank Friday after an analyst suggested the company could face slowing sales in the second half of the year despite what looks to be a solid second quarter.

Shares of Texas Instruments (down $0.80 to $29.92, Research), the nation's biggest maker of chips for cell phones, lost about 3 percent in afternoon trading. The shares had traded higher early in the day following a stronger-than-expected mid-quarter update from the company.

TI said after the market closed Thursday that it expects second-quarter earnings of 46 to 48 cents a share, well ahead of an earlier forecast of 38 cents to 43 cents.

The Dallas-based company also raised its revenue forecast to $3.63 billion to $3.78 billion, from its earlier forecast of $3.46 billion to $3.75 billion

The company raised the forecast in part because of a boost from two one-time items: a $70 million cash payment from Conexant Systems for a previously announced settlement of a patent dispute and a sales tax benefit in the quarter.

The two items are expected to contribute a combined 5 to 6 cents a share, the company said late Thursday.

But Citigroup analyst Glen Yeung cut his price target on the stock to $36 from $41, citing potentially lower than expected sales of chips for cell phones in the second half of the year.

Yeung, who kept his "buy" rating on the stock, wrote in a note to clients that he still believes in TI's longer-term outlook, given its position in higher-growth communications markets.

-----------------------------

Related: Texas Instruments rallies on forecast

Chip stocks