On Wednesday, Needham, a notable investment firm, increased its price target for shares of Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM) to $168, up from the previous $133, while reiterating a Buy rating on the stock.
The firm's adjustment reflects a cautiously optimistic stance despite the recent earthquake in Taiwan, which is expected to affect the company's second-quarter financial performance in 2024.
The analyst at Needham acknowledges that the natural disaster may cause short-term production delays and wafer losses for TSMC, potentially impacting sales for the June quarter. To account for this, the analyst has revised the second-quarter revenue and gross margin (GM) estimates to be 5% and 200 basis points lower than the consensus estimates, respectively.
Despite these adjustments, TSMC has confirmed its full-year revenue growth forecast, which is anticipated to be in the low- to mid-20s percentage range. Needham expects the semiconductor giant to recover most of the lost sales in the third quarter of 2024 and to achieve its annual growth objectives.
The firm draws parallels to a previous incident in 2019 involving photoresist supply disruption to assess the potential impact on TSMC's operations. Based on this comparison, the expectation is that the company will navigate through the current challenges and maintain its growth trajectory.
In conclusion, Needham's updated price target suggests confidence in TSMC's ability to overcome near-term obstacles and continue as a leading entity in the semiconductor industry, particularly in the AI sector.
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