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United Microelectronics stock remains a Buy at BofA, driven by solid GPM and 6% yield

EditorAhmed Abdulazez Abdulkadir
Published 09/25/2024, 06:42 AM
UMC
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On Wednesday, BofA Securities maintained a positive stance on shares of United Microelectronics Corp (2303:TT) (NYSE: UMC), reiterating a Buy rating and a price target of NT$60.00. The firm's optimism is based on the semiconductor company's improving fundamentals, structural growth drivers, appealing valuation, and a strong dividend yield.

United Microelectronics has demonstrated financial resilience, with its July and August revenues contributing to 69% of BofA Securities' third-quarter revenue projections. The company is poised to reach the upper end of its performance guidance, boasting a gross profit margin (GPM) exceeding 35%. This robust performance underpins the confidence in the company's prospects.

BofA Securities has adjusted its 2024 earnings estimates for United Microelectronics upwards by 2%, reflecting the company's robust performance anticipated in the third and fourth quarters of the year. The firm's reiteration of the Buy rating and price target underscores its expectation of continued strong results from the semiconductor manufacturer.

The analyst highlighted United Microelectronics' attractive valuation, which currently stands at 11 times price-to-earnings (PE) ratio. Additionally, the company offers an appealing dividend yield of 6%, making it an attractive option for investors seeking income-generating stocks.

United Microelectronics' consistent performance and the upward revision in earnings estimates reflect the company's strategic positioning in the market. BofA Securities' reaffirmed price target of NT$60.00 indicates a continued positive outlook for the company's shares on the stock market.

In other recent news, United Microelectronics Corporation (UMC) reported a steady growth in its Q2 2024 earnings. The semiconductor manufacturer's consolidated revenue reached NT$56.8 billion, a 4% increase from the previous quarter, with a gross margin of 35.2%. In addition, UMC's net income attributable to shareholders reached NT$13.8 billion, with earnings per share at NT$1.1120.

The company's President, Jason Wang, foresees an improved market dynamic in upcoming quarters, particularly in communication and computing segments. In compliance news, UMC continues to meet the U.S. Securities and Exchange Commission (SEC) regulations, as evidenced by its recent Form 6-K filing. Goldman Sachs has upgraded UMC from Neutral to Buy, influenced by the company's strong profitability and appealing valuation.


InvestingPro Insights


In line with the positive outlook from BofA Securities, United Microelectronics Corp (UMC) shows compelling data that may interest investors. With a market capitalization of $21.23 billion and a Price/Earnings (P/E) ratio of 12.62, the company presents as a potentially undervalued player in the semiconductor industry, especially when considering its adjusted P/E ratio for the last twelve months as of Q2 2024 stands at 13.13. Additionally, UMC's dividend yield as of the latest data is an attractive 4.07%, which complements the company's history of maintaining dividend payments for 15 consecutive years, as noted in one of the InvestingPro Tips.

Moreover, UMC's operational efficiency is highlighted by a gross profit margin of 33.63% and an operating income margin of 23.77% for the same period. These margins underscore the company's ability to convert revenues into profits efficiently. For investors looking for long-term performance, UMC has demonstrated a strong return over the last five years, and analysts predict the company will continue to be profitable this year. These insights are just a glimpse of what InvestingPro offers, with additional tips available that can further guide investment decisions.

For those interested in exploring more about United Microelectronics Corp's financial health and stock performance, additional InvestingPro Tips are available, providing in-depth analysis and forecasts. Visit InvestingPro for more exclusive tips and real-time data to inform your investment strategy.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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