The second quarter could mark the bottom for earnings per share, according to Susquehanna
Investors are already baking in the “worst-case earnings scenario” for Taiwan Semiconductor Manufacturing Co. Ltd., and that makes its stock worth another look, according to one analyst.
Medhi Hosseini of Susquehanna Financial Group bumped his rating on the stock TSM, +0.91% 2330, -0.96% up to positive from neutral Monday, writing that the “risk/reward profile” for TSMC “is attractive enough” to warrant the upgrade ahead of the company’s April 20 earnings report.
While Hosseini expects that TSMC will lower its full-year revenue forecast and give a second-quarter outlook that’s below the consensus view, he has a better feeling about the second half of the year.
“In short, our long-held thesis that 2023 will be like an L-shaped recovery is now well understood and dialed into [TSMC’s] share price,” he wrote. “In addition, there are a number of new products scheduled to ramp in [the second half of 2023] that we believe will help offset the adverse impact of any residual inventory correction.”
Those new products include Apple Inc.’s anticipated A17 and M3 chips.
In addition, Hosseini expects TSMC’s earnings per share to grow more quickly than revenue in the third quarter, “a trend expected to gain momentum into 2024 as new products are ramped at N3/5 nodes,” he said. The second quarter could mark the bottom for earnings per share, he noted.
He upped his price target on TSMC’s U.S.-listed shares to $126 from $76. The shares, which closed Friday at $87.20, were ahead about 1% in Monday’s premarket action.