Stifel Reiterates Buy on TSMC, $515 Price Target

Stifel analyst Sahej Singh reiterated a Buy rating and $515 price target on Taiwan Semi (NYSE: TSM).

“TSM’s August revenue grew 10.1% sequentially, ahead of the 3-and-5-year August averages, pushing first eight-month growth to 39.3%.

That already brackets full-year guidance of slightly above 40%, the more consequential figure, and sets up a 3Q print above guide and consensus even with a seasonally flat-to-down September.

The swing factors are FX, now slightly less favorable at NT$31.65 versus the NT$32.00 guided, and gross margin, pressured by the 2nm ramp and overseas fab build.

We take the over on margin, helped by sustained 7nm-to-3nm utilization and pricing increases landing over the next few quarters.

Wallet share optics look softer against SIA global sales, but that is largely memory inflating the denominator, in our view.

As volume and pricing benefits build, we expect that dynamic to improve again, which should sustain and incrementally benefit valuation, closing the gap between price and improving fundamentals in the near-term.”

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