So far this year, Taiwan Semiconductor Manufacturing Co. (TSMC) has seen $100 billion of its market evaluation gradually stripped from it. However there are still a legion of analysts who feel the stock is an unmitigated buy, regardless.
According to sell-side analyst estimates massed by Bloomberg, as macro-issues weighing down the sector lessen, and investor-focus returns to the fundamentals, TSMC shares should climb 50% to a record high in the next 12 months.
Chairman Mark Liu predicted Wednesday there would be 30% revenue growth this year, causing fund managers to begin considering the stock may have come close to its bottom. Growth in sales for May was 65% year over year, according to TSMC data released Friday after close.
Still, shares dropped 2% during trading in Taipei.
While TSMC has lost about 10% of its value so far, that is only about half the 2022 drop in the global semiconductor benchmark index. The company is also the most important chipmaker for numerous other high-tech giants, from Nvidia to Apple, making it a power player in the global technology supply chain.
Alex Huang, manager of Capital Hi-Tech Fund in Taipei said, “Buyers may return as soon as non-fundamental factors disappear.” He says he feels that inflation and the war in Ukraine are temporary factors weighing down the stock, which will abate with time, likely in the later part of this year.
Sanford C Bernstein analysts including Mark Li wrote in note, “While many worry about a cyclical correction, we forecast share gain and robust pricing which will ensure TSMC grows uninterruptedly this year and also in 2023 and 2024.”
JPMorgan Chase & Co. analysts including Gokul Hariharan said in a note this week, “We think TSMC stock is already factoring in a downturn. However, the extent of potential downside to 2023 estimates is still unclear.” They gave TSMC a buy rating.
Morgan Stanley analysts including Charlie Chan said TSMC’s, “future looks secure,” and “We think now is a great time to accumulate.”
In Bloomberg’s analysis, of 37 analysts polled, 34 were buys, three were holds, and none were sells. Their average 12-month pricing target was NT$816.75. At close Friday, TSMC was trading at NT$530.
