Taiwan Semiconductor rises as Susquehanna upgrades ahead of Q1 results
SweetBunFactory
Taiwan Semiconductor (NYSE:TSM) shares rose fractionally in premarket trading on Monday as investment firm Susquehanna upgraded the global semiconductor foundry ahead of its first-quarter results later this week.
Analyst Mehdi Hosseini raised his rating on Taiwan Semiconductor (TSM) shares to positive from neutral and boosted the per-share price target to $126 from $76, noting that the worst-case scenario is already baked in and the ramp of new products should help this year.
"The ramp of new products is helping with modest revenue improvement in [the second-half of 2023] following a severe wafer shipment/revenue decline in [first-half of 2023]," Hosseini wrote an investor note.
Taiwan Semiconductor (TSM) is slated to report fiscal first-quarter results on April 20 and a consensus of analysts expect the company to earn $1.20 per share on $16.97B in revenue.
Hosseini added that with the utilization rate expected to rebound in the third-quarter after showing 30 or more points of decline in the first-half of the year, "quarterly EPS should rebound at a faster pace than revenues," a trend that is expected to last into 2024.
Last week, Taiwan Semiconductor (TSM), which produces chips for companies such as Apple (AAPL), Nvidia (NVDA), AMD (AMD) and others, released March revenue figures that showed a 15% year-over-year decline to NT$145.41B. Overall revenue for the first-quarter rose 3.6% year-over-year.
Hosseini added that he expects an L-shaped recovery in the semiconductor market, with the expectations " now well understood and dialed into TSM's share price."
Despite the concerns about a consumer slowdown and geopolitical risks from China, Taiwan Semiconductor (TSM) is still the "preferred foundry choice" for leading-edge chips, as Samsung (OTCPK:SSNLF) has not yet demonstrated its technological prowess and Intel's (INTC) foundry business is "years away from offering a competitive solution," Hosseini added.
Last week, it was reported that Taiwan Semiconductor (TSM) may lower its 2023 capital spending plans.
Analysts are mostly bullish on Taiwan Semiconductor TSM. It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates TSM a HOLD.