TSM Stock: Taiwan Semiconductor Beats June-Quarter Sales Target

Chip foundry Taiwan Semiconductor Manufacturing (TSM) on Friday posted solid monthly sales to close out the second quarter. TSM stock rose after the report.

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The company, known as TSMC, reported June figures in New Taiwan dollars, or NT. Sales were NT$175.9 billion, roughly equal to $5.95 billion in U.S. dollars. Revenue rose 18.5% year over year in local currency but fell 5.3% from May.

The company’s second-quarter revenue totaled NT$534 billion, or $18.16 billion in U.S. dollars, vs. analyst estimates for NT$515.3 billion, or $17.53 billion in U.S. dollars. In the year-ago quarter, TSMC brought in the equivalent of $13.35 billion in sales.

“While TSMC nicely exceeded estimates for the quarter, the slight downtick in sales (May to June) is atypical vs. TSMC’s performance in both recent quarters and more generally in the calendar Q2 period,” Wedbush Securities analyst Matt Bryson said in a note to clients.

TSM Stock Rises After Report

He added, “The dip, while not acute, could be seen as mirroring the recent feared deterioration in semiconductor demand.”

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Still, Bryson reiterated his outperform rating on TSM stock.

On the stock market today, TSM stock increased 1.1% to close at 81.51.

Taiwan Semiconductor should get a “meaningful tailwind” in the back half of the year from making chips for Apple‘s (AAPL) new iPhones, due out in September, Bryson said.

In the intermediate to longer term, TSMC is well positioned to grow to grow at accelerated rates due to secular trends, he said. Those trends include artificial intelligence, electric vehicles, 5G wireless and Internet of Things.

Taiwan Semi Has So-So Composite Rating

Needham analyst Charles Shi maintained his buy rating on TSM stock, but lowered his price target on its U.S. shares to 110 from 125.

In a note to clients, Shi said Taiwan Semiconductor delivered strong sales in the second quarter but investors are more focused on its outlook. TSMC plans to report its second-quarter earnings next Thursday.

Analysts expect TSMC to earn $1.43 per U.S. share, up 54% from the year-earlier period.

TSM stock ranks No. 11 out of 31 stocks in IBD’s semiconductor manufacturing industry group, according to IBD Stock Checkup.

TSM stock has a middling IBD Composite Rating of 61 out of 99. IBD’s Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock’s strengths. The best growth stocks have a Composite Rating of 90 or better.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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