Taiwan Semiconductor Manufacturing (TSM) PT Raised to $180 at Susquehanna
Susquehanna analyst Mehdi Hosseini raised the price target on Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM) to $180.00 (from $160.00) while maintaining a Positive rating.
The analyst commented: 'We are increasing CY24/25 EPS estimates as recent checks suggest blended ASPs tracking better than expected. Some of the increases are driven by increased demand for leading edge, while trailing-edge ASPs have remained flattish despite competitors offering discounts. This estimate increase follows our 2/13 estimate increase, which was driven by an upside to wafer shipments. Yes, there remain pockets of excess inventories in the Semiconductor supply chain, which we highlighted in our 3/26 FWD DOI analysis. There is also excess inventory among Specialty Foundries as noted in the 3/28 disappointing guide by Soitec. But, TSMC's customers need leading edge to ramp new AI products for Cloud/DC application, while needing leading edge to ramp new CPU and GPU tiles for NB AI products. TSM's mobile customers are also ramping new products at the leading edge. In the trailing edge, competitors aggressively discounting wafer ASPs has not impacted TSM's pricing scheme since we see flattish pricing trends. Looking forward, we expect more positive news to emerge throughout the year, helping with incremental confidence with EPS power of $10 (TWD62). As such, not only do we think the shares are undervalued considering the earnings power, the current valuation (of 21x FWD P/E) is also nowhere near the SOX's 31x FWD P/E. In a nutshell, we argue the real re-rating has not even begun since TSM is the only viable solution for the manufacturing of key AI components, while the overall 2025 demand picture (outside of AI) is also constructive following nearly two years of inventory correction.'