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Investing.com - Bernstein SocGen Group lowered its price target on Taiwan Semiconductor Manufacturing Company (NYSE:TSM) to $249.00 from $251.00 on Wednesday, while maintaining an Outperform rating on the stock. The semiconductor giant, currently trading at $227.86 and commanding a market cap of $962 billion, maintains a "GREAT" financial health score according to InvestingPro analysis.
The firm cited rapid foreign exchange movements as the primary reason for the adjustment, projecting that currency headwinds will create significant pressure on Taiwan Semi’s revenue and margins. Bernstein SocGen now assumes an exchange rate of 32.5 New Taiwan dollars to 1 U.S. dollar in Q2 2025 and 29 for Q3 2025 and beyond. With current gross margins at 57.4% and revenue growth of 39.9% in the last twelve months, TSM has demonstrated strong operational performance despite currency challenges. InvestingPro subscribers can access over 30 additional key metrics and exclusive insights about TSM’s financial performance.
These currency shifts are expected to create approximately 5% headwind versus Taiwan Semi’s guidance assumption in Q2 2025 and another 6% in Q3 2025. Additionally, the firm projects gross margin drags of 200 basis points and 240-250 basis points in those respective quarters.
On a full-year basis, Bernstein SocGen estimates the foreign exchange pressure will impact Taiwan Semi’s revenue by approximately 5.5% in 2025 and another 4-4.5% in 2026. Gross margins are projected to face pressure of 220 basis points this year and 170 basis points next year.
The firm’s revised price target is based on a 19x target PE ratio, down from its previous 20x multiple, reflecting lower growth expectations in New Taiwan dollar terms. Despite the currency challenges, Bernstein SocGen continues to see Taiwan Semi’s fundamentals improving.
In other recent news, Taiwan Semiconductor Manufacturing Company (TSMC) has seen several notable developments. Needham has raised its price target for TSMC to $270, maintaining a Buy rating, driven by strong AI growth projections. The firm anticipates TSMC’s total revenue to increase significantly from $114 billion in 2025 to $160 billion by 2027, with AI revenue expected to rise from $26 billion to $46 billion in the same period. Goldman Sachs also raised its price target for TSMC, citing robust demand for advanced chip packaging technologies and increased its earnings forecast by 2-6% for 2025-2027. Additionally, Goldman Sachs added TSMC to its APAC Conviction List, predicting a 26% revenue growth in fiscal year 2025. Meanwhile, Citi reiterated its Buy rating on TSMC, highlighting the company’s technological advancements and strategic positioning in AI and high-performance computing sectors. However, Morgan Stanley (NYSE:MS) has reduced its price target for TSMC to TWD2,330, maintaining an Overweight rating, amid concerns about potential order reductions for its CoWoS technology. Despite this, Morgan Stanley remains optimistic about TSMC’s future, noting that AI investments from companies like Meta (NASDAQ:META) and Microsoft (NASDAQ:MSFT) could alleviate these concerns.
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