The share price slump that has erased about US$100 billion from the market value of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) this year means little to the legion of analysts who see the stock as a screaming buy.
TSMC shares are expected to climb about 50 percent to a record high 12 months from now, according to sell-side analyst estimates compiled by Bloomberg, as macro headwinds buffeting the sector ease and investors focus on the company’s fundamentals.
Fund managers are also starting to view an end in sight to the rout, and TSMC chairman Mark Liu’s (劉德音) Wednesday forecast for 30 percent revenue growth this year bolsters this case.
Photo: Tsai Shu-yuan, Liberty Times.
The company’s sales last month grew 65 percent from last year, TSMC reported yesterday after the market closed.
Shares fell 2 percent during the session in Taipei.
While the scale of TSMC’s drop is notable, having shed more than 10 percent of its share value, it is still about half the fall this year in the global semiconductor benchmark index.
The company occupies a powerful position in the global technology supply chain as the most advanced maker of chips for giants from Apple Inc to Nvidia Corp.
“Buyers may return as soon as non-fundamental factors disappear,” said Alex Huang (黃俊斌), manager of Capital Hi-Tech Fund of Capital Investment Trust Corp (群益投信).
Being the largest and the most liquid stock on Taiwan’s equity market has made TSMC an easy selling target for some foreign investors, Huang said.
“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,” Sanford C Bernstein analysts including Mark Li wrote in note earlier this month.
Of the 37 recommendations by analysts compiled by Bloomberg, 34 are buys, three are holds and none are sells.
“We think TSMC stock is already factoring in a downturn,” JPMorgan Chase & Co analysts including Gokul Hariharan said.
“However, the extent of potential downside to 2023 estimates is still unclear,” they said, while maintaining a buy rating.
Others are less hesitant.
Morgan Stanley analysts including Charlie Chan (詹家鴻) said the current nervousness in the market presents a good opportunity to buy TSMC.
“We think now is a great time to accumulate,” Chan wrote in a report late last month, noting the company’s technology leadership.
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