Barclays Capital yesterday said that it has raised its target price for Taiwan Semiconductor Manufacturing Co (台積電, TSMC) shares after the world’s largest contract chipmaker gave a better-than-expected guidance for the fourth quarter.
At an investor conference on Thursday, TSMC said it expected its consolidated sales for this month through December to fall between 9.6 percent to 11.4 percent from NT$162.58 billion (US$5.53 billion) in the third quarter on inventory adjustments.
TSMC also said its operating margin for the fourth quarter could fall to between 32 percent to 34 percent from 36.7 percent in the previous quarter.
Though TSMC expected its sales to fall, its projections were still better than Barclay’s latest estimates, which had forecast TSMC’s sales for the fourth quarter to fall 13 percent to 17 percent and the firm’s operating margin to drop to as low as 27 percent.
Barclays analyst Andrew Lu (陸行之) said TSMC’s earnings per share of NT$2 for the quarter were within the expectations of most foreign brokerages.
As a result, Barclays lifted its target price on TSMC shares to NT$139 from NT$128, while maintaining its recommendation on the stock at “overweight.”
Lu said TSMC remains a top pick among the semiconductor stocks in Asia (excluding Japan).
TSMC shares closed up 2.80 percent at NT$110, with 58.66 million shares changing hands after the investor conference, while the weighted index on the Taiwan Stock Exchange ended up 0.79 percent at 8,441.19.
Several foreign brokerages, including Deutsche Securities and Bank of America Merrill Lynch, also maintained their “buy” recommendation on TSMC shares.