Boston, MA 07/08/2014 (wallstreetpr) – Shares of Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM) have gained nearly 30 percent since the beginning of this year. However, experts say the stock still has enough room to rally upward, especially in view of two important developments expected this month and later this year.
First and foremost, the company is not expected to report positive results for 2Q2014, but also provide strong revenue forecast for 3Q, according to JPMorgan Chase & Co. (NYSE:JPM).
Out of the 32 analysts covering the stock of Taiwan Semiconductor, 27 raised their earnings estimates on the stock in the month of June. This month JPMorgan raised its 2014 and 2015 earnings estimates on the stock by 3 and 2 percent, respectively.
Apple factor
Apple Inc (NASDAQ:AAPL) is expected to launch iPhone 6 within the next three months. The launch is expected boost Taiwan Semiconductor’s revenue because it supplies chips used in iPhone. As such, about 13 and 15 percent of TSM’s revenue in 3Q and 4Q, respectively, is expected to come from Apple orders. That compares with 4 percent contribution from Apple Inc expected in 2Q.
Playing Apple in TSM
For investors who might find it expensive to acquire Apple Inc directly to benefit from the new product launches, Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM) provides an option.
Various experts have already weighed in on the matter with Edward Chao, fund manager at Jih Sun Securities Investment Trust in Taipei, saying that investors are waiting to see if the success of iPhone 6 matches expectations. He thinks that if the launch is successful shares of Taiwan Semiconductor will continue to surge this year.
According to John Chiu of Fuh Hwa Securities Investment Trust in Taiwan, “Apple is a very big stock, and that limits the upside potential for earnings growth and share price.” As such, he expects investors to go for Apple component suppliers like Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM) that are smaller but with bigger growth potential.
