Is TSMC stock a buy after guiding Q4 revenue above estimates?

on Oct 14, 2021
  • Taiwan Semiconductor Manufacturing Co. shares on Thursday advanced 3% after reporting Q3 results.
  • The company announced its most recent quarterly results before markets opened, beating analyst expectations.
  • TSMC also issued its Q4 revenue guidance ahead of analyst expectations after solid growth in Q3.

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On Thursday, Taiwan Semiconductor Manufacturing Co. Ltd (TAI:2330) shares spiked 3% after announcing its most recent quarterly results. The company reported its fiscal third-quarter revenue and earnings before markets opened, beating analyst expectations. TSMC also issued better-than-expected FQ4 revenue guidance.

The company posted FQ3 -GAAP earnings per share of $1.07, beating the consensus Street estimate of $1.04. In addition, its revenue for the quarter surged by 22.6% Y/Y to $14.88 billion, $140 million ahead of estimates. As a result, the company issued optimistic Q4 revenue guidance of $14.4 billion to $15.7 billion, higher than the consensus analyst estimate of $15.29.

Although TSMC shares are up more than 27% over the last 12 months, the stock price has declined nearly 20% since the 16th of February. 

TSMC’s exciting outlook

From an investment perspective, Taiwan Semiconductor Manufacturing shares trade at a reasonable forward P/E ratio of 22.84, making the stock an attractive option for value investors.

Moreover, analysts expect the company’s earnings to grow by 50% this year, before rising at an average annual rate of about 16% over the next five years. Therefore, the stock could also gain the attention of growth investors ahead of its exciting growth story.

Source – TradingView

Technically, TSMC shares seem to have recently bounced off the trendline support of the intraday chart, thus pushing the stock price towards the 100-day moving average. However, the stock is still far from reaching overbought conditions, thereby leaving room for more upward movement.

As a result, investors could target extended rebound profits at about $116.90, or higher at $120.65. On the other hand, if the 100-day MA provides solid resistance, thus triggering a pullback, TSMC could find support at $107.89, or lower at $103.45.

TSMC looks like a good buy

In summary, although TSMC shares spiked 3% following its solid Q3 performance, the stock is yet to reach overbought conditions, leaving room for continued upward movement. 

Moreover, Taiwan Semiconductor Manufacturing offers exciting growth prospects at reasonable valuation multiples.


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