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Foreign brokerages maintain 'buy' ratings on TSMC

2018/07/21 19:00:43

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Taipei, July 21 (CNA) Several foreign brokerages have recommended that investors buy into shares of Taiwan Semiconductor Manufacturing Co. (TSMC), the world largest contract chipmaker, after the company on Thursday gave its third-quarter sales guidance.

Although TSMC has forecast a slowdown in its quarterly revenue growth, its share price has been factored into its third-quarter projection of less than 10 percent growth, the brokerages said.

On Thursday, TSMC CEO and Vice Chairman C.C. Wei (魏哲家) said at an investor conference that weaker global demand for mining devices used for cryptocurrency transactions is expected to affect the company's sales, resulting in 8 percent sequential growth in the third quarter.

The third quarter guidance was given after TSMC reported a net profit of NT$72.29 billion (US$2.35 billion) for the April-June period, down 19.5 percent from the first quarter. The second quarter results, however, were in line with market expectations.

An Asian brokerage, one of seven that gave TSMC a "buy" rating, said the chipmaker's sales forecast for the July-September period was also within market expectations.

TSMC shares were in consolidation for some time and are now at a good buying point, the brokerage said, keeping its "buy" rating and a target price of NT$300 on the stock.

After TSMC's latest investor conference, its American depositary receipts rose 3.64 percent on the U.S. market on Thursday, while the stock gained 5.79 percent to close at NT$237.50 on the local stock market Friday.

During the session, foreign institutional investors bought a net 37.40 million TSMC shares, which helped push up the stock's market capitalization by NT$337 billion to NT$6.15 trillion.

The Asian brokerage said after a slowdown this year, TSMC sales growth is expected to gain momentum in 2019.

An American brokerage gave a similar forecast, saying TSMC sales growth will begin to pick up in the fourth quarter of this year and will accelerate in 2019.

The U.S. securities house maintained a "buy" rating and a target price of NT$280 on TSMC shares.

A European brokerage, meanwhile, also kept its "buy" recommendation on the stock and retained its target price of NT$268.

CNA cannot identify the brokerages because media outlets in Taiwan are not allowed to report the names of foreign brokerages when they give price-moving forecasts for specific stocks or the wider market.

(By Jeffrey Wu, Chang Chien-chung and Frances Huang)