Sign InTSMC Faces Bearish Trend Amid Price Drop and Upcoming Earnings; Long-Term Potential Remains
Summary
On April 3, 2025, Taiwan Semiconductor Manufacturing Company (TSM) faced a notable 7.64% decline in stock price, hovering near its 52-week low, while analysts anticipate potential growth driven by a forthcoming joint venture with Intel and an upcoming earnings announcement.
Technical Analysis
On April 3, 2025, Taiwan Semiconductor Manufacturing Company Limited (TSM) closed at $157.38, reflecting a significant decline of 7.64% from the previous close. The stock traded between $157.27 and $161.80 during the day, inching closer to its 52-week low of $125.78. TSM’s Relative Strength Index (RSI14) sits at 33, indicating that the stock is approaching oversold conditions. This technical indicator, combined with the recent price decline, suggests heightened selling pressure. The 50-day and 200-day moving averages are significantly above the current price, at $188.43 and $185.06 respectively, which signifies a bearish trend in the short to medium term. Additionally, the Moving Average Convergence Divergence (MACD) of -4.37 further reinforces the bearish outlook.
Fundamental Analysis
Fundamentally, TSM reports a trailing twelve months (TTM) earnings per share (EPS) of $6.80, with a price-to-earnings (PE) ratio of 23.14, indicating a moderate valuation within the semiconductor industry. The company will announce its next earnings on April 17, 2025, which could serve as a catalyst for stock movement depending on the results. The market's expectation seems positive as reflected in analysts' estimates, with a consensus price target of $183.75, significantly above the current trading price.
The recent news of a potential joint venture between Intel and TSMC introduces a strategic growth opportunity, potentially leading to increased foundry operations and revenue streams. While details remain sparse, this could bolster TSM's long-term strategic positioning in the semiconductor space.
Intrinsic Value and Long-term Potential
The discounted cash flow (DCF) model yields an intrinsic value of $22.33 per share, significantly lower than the current market price. However, when considering the growth prospects from the joint venture and expected earnings, TSM holds substantial growth potential in the long term. The dividend yield, based on TTM, stands at 1.25%, offering additional incentives for income-focused investors.
Short-term Prediction
In the short term, the stock might experience volatility due to the recent price drop and the forthcoming earnings announcement. The RSI indicates potential for short-term rebound, although significant resistance is noted at $172.97. Given the volume surge to 26.04 million shares (above the average of 17.24 million), increased investor activity is expected to continue.
Overall Evaluation
Sell, Hold, or Buy Assessment: TSM currently aligns more closely with a Hold position. While short-term technical indicators suggest bearish momentum, the company's fundamental health and potential strategic ventures with Intel offer promising long-term prospects. Investors with a focus on growth should monitor upcoming earnings and developments in the joint venture closely, which could provide further clarity on operational synergies and financial benefits.
Featured Broker:
