On Monday, Morgan Stanley updated its outlook on Taiwan Semiconductor Manufacturing Co. Ltd. (2330:TT) (NYSE: TSM) shares, increasing the price target to NT$1,180.00 from NT$1,080.00. The firm maintained an Overweight rating on the stock. The revision reflects the anticipation of positive second-quarter prints and guidance that are expected to align with current market expectations.
The optimism from Morgan Stanley is partly due to projected advancements in wafer pricing and a surge in demand for SoIC 3D IC, a technology crucial for semiconductor manufacturing.
The firm's analysis suggests robust demand for this technology, especially with the expected adoption by major tech companies. Apple (NASDAQ:AAPL) is anticipated to incorporate the technology in the second half of 2025, while NVIDIA (NASDAQ:NVDA) is projected to follow suit in 2028.
Morgan Stanley's revised price target is based on a 23-fold multiple of the firm's new earnings per share (EPS) estimate for the year 2025. This adjustment reflects an increased confidence in the mid-term growth forecasts for TSMC. The firm's analysts believe that the semiconductor manufacturer's financial performance will be buoyed by these industry developments.
The price target increase by Morgan Stanley signals a positive outlook for TSMC's financial future, resting on the expectation of sustained demand for its cutting-edge semiconductor technology. This is particularly significant as the tech industry continues to evolve and demand for more sophisticated components increases.
The announcement is likely to be of interest to investors monitoring the semiconductor sector, as it relates to one of the leading companies in the industry. With a maintained Overweight rating, Morgan Stanley's stance suggests continued confidence in TSMC's market position and its ability to capitalize on emerging trends within the semiconductor industry.
In other recent news, Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) has been in the spotlight with various analyst firms adjusting their price targets. Bernstein SocGen Group raised its price target to $200.00, citing an anticipated surge in TSMC's full-year revenue and EPS for 2024.
This is expected to be driven by high demand in high-end phones and advanced nodes. Morgan Stanley also increased TSMC's price target due to strong demand for Apple's AI semiconductors.
Susquehanna upgraded TSMC's price target, highlighting the company's industry leadership in the N3, N4, and N5 semiconductor nodes. Citi raised its price target for TSMC, reflecting the company's strong market position and anticipated growth in demand for AI GPUs/accelerators and edge AI devices.
TSMC reported mixed Q1 2024 earnings, with a sequential revenue decline but an increase in gross margin. The company's Q2 revenue is forecasted between USD 19.6 billion and USD 20.4 billion, with a gross margin of 51% to 53%.
TSMC's N2 technology is expected to start volume production in 2025, with AI processors predicted to significantly drive revenue growth in the coming years. These are recent developments that investors may find noteworthy.
InvestingPro Insights
As Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM) garners attention with Morgan Stanley's updated outlook and price target increase, real-time data from InvestingPro provides additional context for investors. TSMC's adjusted market capitalization stands at a robust $803.75 billion, reflecting its significant presence in the semiconductor industry. The company's price-to-earnings (P/E) ratio, a key metric for valuation, is currently at 30.41, with a slight increase to 31.3 when adjusted for the last twelve months as of Q1 2024. This aligns with the industry's growth prospects and Morgan Stanley's positive sentiment.
Investors may also find the company's revenue growth noteworthy. While TSMC experienced a slight decline of -1.56% in revenue over the last twelve months as of Q1 2024, the quarterly revenue growth for Q1 2024 was substantial at 16.52%, indicating a strong start to the year. Additionally, the company's dividend growth rate was 21.28% for the same period, showcasing its commitment to returning value to shareholders.
For those seeking to delve deeper into TSMC's financial health and investment potential, InvestingPro offers more insights and metrics. The platform lists several additional InvestingPro Tips that can further guide investment decisions. Interested readers can take advantage of a special offer using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, gaining access to exclusive financial analysis and tips.
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