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Needham analyst Charles Shi reiterated a Buy rating on Taiwan Semiconductor Manufacturing Co (NYSE:TSM) with a price target of $210.
Shi said Taiwan Semiconductor reported fiscal 2024 second-quarter results, with revenue of $20.82 billion and earnings per ADS of $1.48, beating consensus estimates on both the top and bottom lines.
Taiwan Semiconductor’s performance can be attributed to strong demand for both the 3nm and 5nm nodes, which contributed 15% and 35% of total wafer revenue for the quarter, respectively, as per the analyst.
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The financial result was partially offset by seasonal weakness in smartphone sales, which decreased 1% sequentially, he noted.
The quarter’s gross margin of 53.2% was slightly below consensus due to margin dilution from the N3 ramp.
Shi highlighted Taiwan Semiconductor’s fiscal 2024 third-quarter guidance, which included midpoint revenue of $22.80 billion, gross margin of 54.5%, and operating margin of 43.5%, all above consensus estimates.
The analyst said the upbeat guidance is mainly due to the continued rise in AI-related demand and seasonal smartphone demand for both 3nm and 5nm.
Additionally, Taiwan Semiconductor raised its fiscal 2024 revenue guidance from “low- to mid-20s %” to “slightly above mid-20s %”, which is mainly within market expectations, Shi noted.
Shi now expects third-quarter revenue of $22.80 billion (prior $23.5 billion) and earnings per ADS of $1.77 (prior $1.78).
The analyst foresees fiscal 2024 revenue of $87.89 billion (prior $88.13 billion) and earnings per ADS of $6.62 (prior $6.53).
He anticipates fiscal 2025 revenue of $110.00 billion and earnings per ADS of $8.45 (prior $8.44).
Price Action: TSM shares traded lower by 3.50% at $165.82 at the last check on Friday.
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Posted In: TSM