Jan 14, 2017 Legal Comments Off on Despite caution on 1st half, 2 foreign brokerages rate TSMC ‘buy’
Taipei-, Although Taiwan Semiconductor Manufacturing Co. (TSMC, ???), the world's largest contract chip maker, expressed caution about the first half of this year, two foreign brokerages still recommended a "buy" or "overweight" on the stock.
In a research note issued Friday, a European brokerage appeared upbeat about TSMC's outlook, despite the alert voiced by TSMC over the first half of the year.
They left a "buy" rating and a target price of NT$225 (US$7.12) on the stock unchanged. The NT$225 is the highest target price among the foreign brokerages which tracks TSMC.
Shares of TSMC fell 1.63 percent to close at NT$181.50 on the Taiwan Stock Exchange on Friday after the chip maker said in an investor conference held on Thursday that its consolidated sales in the first quarter will fall 8.8-10 percent from the previous quarter, lagging behind the market's expectation of a 5-8 percent sequential drop.
Selling in the stock on Friday also came after TSMC said that sales for the second quarter will be affected by continued inventory adjustments among its clients. Investors simply shrugged off TSMC's record high net profit in the fourth quarter of 2016 and for the entire last year.
However, the brokerage said that it has faith in TSMC's ability to implement its expansion programs, the chip maker's leads over its peers in production technology, and its sound financial conditions.
The brokerage said that after a slow first half of this year, TSMC is expected to benefit from solid demand for chips made on its 28 nanometer process and an increase in shipments of chips made on its 10nm process in the second half of the year.
CNA cannot identify the brokerage because media outlets in Taiwan are not allowed to report the name of a foreign brokerage when it gives price forecasts for specific stocks.
A brokerage based in Asia said that it has also maintained an "overweight" recommendation on TSMC shares since an improvement in smartphone specifications by international brands will broaden the use of TSMC's advanced processors.
But the brokerage has cut a target price on the stock to NT$206 from NT$210 in the wake of caution on its sales the first half of the year, which could affect its bottom line for 2017.
Another Asian brokerage said that inventory adjustments in the global semiconductor industry in the first half of the year could cap the room for TSMC to rake in profit for 2017, adding that it has cut TSMC's earnings per share for this year by 1 percent to NT$13.88, compared with NT$12.89 in EPS the chip maker recorded in 2016.
The brokerage said that it has maintained a "neutral" rating on TSMC shares and a target price of NT$206.00.
Meanwhile, a U.S.-based brokerage said that it remained to be seen whether TSMC's momentum will pick up in the second half of this year, adding that it has left a "neutral" recommendation on TSMC shares and a target price of NT$175 unchanged.
Source: Focus Taiwan News Channel
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