TAIPEI–Morgan Stanley has upgraded its investment recommendations on semiconductor makers and telecom operators in Asia and global emerging markets, while picking Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung Electronics Co. of South Korea as investment targets.
In a research note, the brokerage said its recent upgrade of a target price on Apple’s shares and an earnings forecast after the launch of the new iPad have served as positive catalysts to the rising optimism toward the integrated circuit sector’s bottom line.
Ahead of the research note, Morgan Stanley had raised a target price on Apple shares to US$720 (NT$21,312) from US$515 and even said the share price of the U.S. consumer electronics giant is likely to reach as high as US$960 over the next 12 months and its market capitalization may reach US$1 trillion.
As a result, Morgan Stanley said it has raised a rating on IC stocks in Asia and global emerging markets to “overweight” from “equalweight” on rising popularity of Apple’s products, adding it is time for investors to buy into semiconductor stocks.
The brokerage said the semiconductor sector has an improving earnings revision breadth, making itself rank highly compared with other sectors in terms of profitability.
Among these semiconductor stocks, Morgan Stanley reiterated it has included TSMC and Samsung Electronics into its focus lists in the Asia Pacific market, excluding Japan, and in the emerging markets.
According to Morgan Stanley, TSMC and Samsung Electronics have the highest weights in the semiconductor industry in the Asia Pacific market, excluding Japan, as well as in the emerging markets, and have outperformed their peers.
Meanwhile, Morgan Stanley has also expressed optimism toward telecom operators’ share price movements by raising its recommendation on the particular sector to “equalweight” from “underweight.”