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TSM Technical Analysis: Bullish Momentum Signals Near 52-Week High Reaching $169.84

StockInvest.us, 1 week ago

Taiwan Semiconductor Technical Analysis

Taiwan Semiconductor Manufacturing Company Limited (TSM) closed at $165.71 on June 11, 2024, reflecting a -1.46% decrease from the previous trading session. The stock recorded a low of $163.79 and a high of $168.405, with a significant volume of 11.47 million shares traded, slightly below the average volume of 14.09 million shares.

The stock is approaching its 52-week high of $169.84, indicating bullish momentum. The RSI14 stands at 64, suggesting the stock is nearing overbought conditions but not yet at an alarming level. The 50-day moving average of $146.16 lies well below the current price, as does the 200-day moving average at $116.16, underscoring a strong upward trend. The MACD (3-month) at 6.03 further indicates sustained bullish momentum.

Key support levels are identified at $149.26, and resistance is marked at $168.16. The current price is hovering close to this resistance, and a break above could signal continued upward movement.

Fundamental Analysis

TSMC boasts a market capitalization of $703 billion, cementing its position as a dominant player in the semiconductor industry. The company’s EPS of $5.21 and a PE ratio of 31.81 indicate significant profitability, though the current valuation is on the higher side. Notably, the upcoming earnings announcement on July 18, 2024, and the next dividend payout on July 11, 2024, are critical upcoming events that could drive stock performance.

Taiwan Semiconductor The DCF calculation yields an intrinsic value of $63.67, significantly lower than the current trading price, suggesting potential overvaluation. Nevertheless, positive analyst sentiment is evident with a consensus price target of $157.67, a median target of $168, and a high target of $180. Notably, all coverage points towards a 'Buy' consensus, with 10 analysts backing this stance and only one in the 'Hold' category.

Market Context and News

Industry news highlights several factors affecting TSMC. The global chip shortage, initiated in late 2020, continues to impact TSMC’s supply chain and production capacity, though surging demand for electronics spurs growth opportunities. Taiwan’s energy issues pose a potential risk, as consistent power outages could disrupt production and impact delivery timelines. However, reports indicate TSMC's diverse growth prospects, especially in AI, and competitive pricing relative to peers like Nvidia, suggesting TSMC remains a compelling investment.

Intrinsic Value and Long-term Potential

Evaluating TSM's long-term potential suggests a well-regarded growth trajectory owing to its leadership in the semiconductor foundry space and broad customer base. The stock’s recent resurgence, coupled with a strong outlook for 2024, reinforces its viability for risk-averse investors. However, the noticeable deviation of the current stock price from its DCF-calculated intrinsic value necessitates caution, although broader market enthusiasm and the company’s inherent growth prospects mitigate these concerns.

Overall Evaluation: Hold

Considering the current technical indicators, fundamental metrics, market conditions, and news sentiment, TSM is categorized as a 'Hold' candidate for now. While the stock exhibits robust growth and strong long-term outlook, its existing valuation leans towards overbought territory, reinforcing a cautious stance until further clarity post-earnings and dividend declarations. This balanced perspective ensures cautious engagement, balancing potential gains with an awareness of associated risks.

Check full Taiwan Semiconductor forecast and analysis here.