2024-03-11 12:42:47 ET
Summary
- The stock has soared higher, driven by a surge in earnings growth, which is expected to continue judging by the latest guidance/outlook.
- TOELF has benefited from a favorable environment, which has ironically been enabled by export controls that could have done the opposite.
- The outlook expects good things for TOELF, but there are several reasons why the future may be a lot more murky than believed.
- Long TOELF has a chance at success, especially in the short term, but the risk of something goes wrong is definitely there.
Tokyo Electron ( TOELF )( TOELY ), one of the leading suppliers of semiconductor manufacturing equipment, is on a roll. Quarterly earnings are on the rise with big improvements in recent quarters. The wafer fab equipment or WFE market is coming off a downturn, but demand has been more robust than anticipated with a helping hand from China in particular. The stock has soared higher as a result, all of which favors the bull case for TOELF. Yet, there are other aspects to take into account, which take away some of the shine from recent achievements. The current short-term boom could set the stage for a long-term bust. Why will be covered next.
The external environment has turned in favor of TOELF
A past article from April 2023 rated TOELF a hold after concluding that while TOELF stood to be affected by the decision of the Japanese government to impose export controls on semiconductor manufacturing equipment, the end result might not be so bad for TOELF. There were likely to be further developments, which could lessen their impact....
Read the full article on Seeking Alpha
For further details see:
Tokyo Electron: The Bull Case Is Less Obvious Than It Appears To Be