Several foreign brokerages have raised their target prices on shares of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) after the world’s largest contract chipmaker gave an upbeat sales outlook for the second quarter.
One of the brokerages, Macquarie Securities, said on Friday it was raising its target price on TSMC to NT$131 from NT$121, prompted by the chipmaker’s better-than-expected sales guidance.
The upbeat sales assessment has reduced concerns that TSMC may lose market share to its rivals for chips in the advanced 28 nanometer (nm) sector, Macquarie Securities said.
Shares of TSMC rose on Friday by the maximum daily 7 percent to close at NT$106.50 on the Taiwan Stock Exchange, with foreign institutional investors buying 17.02 million net worth of the firm’s shares.
The strong buying emerged after the company on Thursday forecast second-quarter consolidated sales of between NT$154 billion and NT$156 billion (US$5.17 billion to US$5.23 billion), a 16 percent to 17.5 percent increase from the figure for the previous quarter.
The strong sales growth forecast reflected solid demand for chips made using the 28nm process, driven by the rising popularity of mobile communications devices, the company said.
With the improved sentiment toward TSMC’s bottom line, Macquarie Securities said it has also upgraded its forecast of the chip maker’s earnings per share (EPS) for this year from NT$6.80 to NT$7.15.
Last year, TSMC’s EPS stood at NT$6.41.
In addition, the brokerage has maintained an “outperform” recommendation on TSMC shares.
JPMorgan Chase also raised its forecast for the chip maker’s EPS next year by 11 percent to NT$7.70. The brokerage has forecast an EPS increase of 8 percent next year to NT$9.10.
The brokerage also increased its target price on TSMC from NT$120 to NT$125 and has kept its “overweight” recommendation.
Meanwhile, Credit Suisse maintained an “outperform” recommendation on TSMC shares, and raised its target price on the stock from NT$109 to NT$116.
The brokerage has forecast an EPS of NT$7.2 this year, and NT$8.25 next year for TSMC.