U.S.-traded shares of Taiwan Semiconductor Manufacturing Co. jumped on Thursday after the world's largest contract chip maker by revenue posted a sharp rise in first-quarter profit.
TSMC, which posted a 49 percent higher first-quarter profit, also forecast stronger second-quarter margins and sales.
TSMC expects gross profit margin between 43 percent and 45 percent for the second quarter and operating profit margin between 32 percent and 34 percent.
Citi Investment Research analyst Andrew Lu raised his price target to $11.20 from $10.60 to reflect the better-than-expected margin outlook and TSMC's ability to control costs in the first quarter.
Lu also said demand has been rising, despite inventory problems facing some customers. However, Lu rates the stock "Hold," for an absence of catalysts that may drive the stock price higher.
Shares of TSMC advanced 10 cents to $11.34 in afternoon trading.
Elsewhere in the sector, Taiwanese chip maker United Microelectronics Corp. rose 5 cents to $3.51, and Singapore-based Chartered Semiconductor Manufacturing Ltd. rose 9 cents to $5.88.
The Bank of New York Asia ADR Index added 0.86 points to 164.35, and the Bank of New York Taiwan ADR index gained 2.10 points to 213.07. The index is composed of stocks trading as ADRs, or American Depositary Receipts, which are securities that allow U.S. investors to trade shares of companies based overseas.
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