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On Thursday, Jefferies analyst Sherman Shang upheld a Buy rating on ASE Technology Holding Co (NYSE:ASX) Ltd (3711:TT) (NYSE: ASX), with a consistent price target of NT$160.00. The endorsement comes amid concerns about the potential implications of US tariff policies on the semiconductor industry and the broader macroeconomic environment. According to InvestingPro data, ASX currently trades at $8.21, with analysts maintaining a strong buy consensus and a potential upside to their target range of $12.42-$13.90. The stock has experienced significant pressure, declining over 23% in the past six months.
Shang has adjusted the firm’s earnings per share (EPS) forecasts for fiscal years 2025 and 2026 to NT$10.96 and NT$13.22, respectively. These revisions account for the unpredictable nature of tariff policies and their possible impact on the macro economy, particularly within the consumer electronics sector. InvestingPro analysis shows the company trading at a P/E ratio of 18.02, with analysts forecasting EPS of $0.33 for FY2025. InvestingPro Tips indicate that while ASX is a prominent player in the semiconductor industry, it’s currently trading at a high P/E ratio relative to near-term earnings growth. Subscribers can access 6 more exclusive ProTips and comprehensive valuation metrics through the Pro Research Report. At present, semiconductors shipped directly to the US are not subject to tariffs. However, the US government has indicated that it may impose a new round of tariffs targeting the semiconductor industry.
The US Department of Commerce (DoC) has recently issued a public notice to gather comments as part of a trade investigation concerning semiconductors. The comment period for this investigation will last 21 days, after which it is highly probable that the US will introduce a new tariff policy on semiconductors based on the findings.
Shang believes that a prolonged tariff situation is likely to first affect consumer demand. To analyze the potential impact, Jefferies has run a scenario where the US market, particularly consumer PC and smartphone demand, would decrease by 20%, while AI demand, being more resilient, is projected to fall by 5%. In this scenario, ASE’s potential downside is estimated to be between 10-15%, with outsourced semiconductor assembly and test (OSAT) companies feeling the effects sooner and more significantly than foundries.
Although customers are still evaluating the tariff situation, it is anticipated that any order adjustments will start to impact OSAT companies like ASE in the third quarter of 2025. Shang notes that for ASE, both the Integrated Circuit Assembly and Test Manufacturing (IC ATM) and Electronics Manufacturing Services (EMS) segments are likely to be affected by these developments. Despite these challenges, ASX maintains strong fundamentals with $18.1 billion market capitalization and has consistently paid dividends for seven consecutive years. The company expects 11% revenue growth in FY2025, demonstrating resilience in a challenging market environment.
In other recent news, ASE Technology Holding Co Ltd. has reported significant developments regarding its future growth prospects. During the company’s fourth-quarter earnings call, ASE Technology projected a notable increase in its Advanced Packaging (NYSE:PKG) and Testing revenues, with expectations to reach $1.6 billion by 2025. Testing revenues are anticipated to grow substantially, potentially making up over 20% of total revenues, while gross margins are expected to return to the high-20% range by the second half of 2025. Operating leverage is predicted to have a positive impact starting in late 2025, supported by a strong increase in capital expenditure, paving the way for continued growth into 2026.
In addition, JPMorgan analysts have revised their price target for ASE Technology, raising it from NT$185.00 to NT$215.00, and maintained an Overweight rating, reflecting confidence in the company’s future performance. This upward adjustment is attributed to robust growth in AI revenue, which is expected to drive earnings per share estimates and contribute to price-to-earnings ratio expansion. ASE Technology’s close outsourcing partnership with TSMC is seen as a key factor in sustaining growth and margin expansion. Moreover, the company may benefit from attracting new business from Chinese customers seeking TSMC Foundry processes, following recent regulatory changes. These developments underscore ASE Technology’s favorable competitive position in the market.
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