On Wednesday, Citi raised its stance on shares of United Microelectronics Corp (2303:TT) (NYSE: UMC), upgrading the stock from Neutral to Buy and increasing the price target to NT$58.00 from NT$52.80. The adjustment comes in the wake of the company's first-quarter earnings for 2024, which surpassed expectations.
United Microelectronics reported stable sales of NT$54.6 billion in the first quarter of 2024, a slight decrease of 0.6% quarter-over-quarter but a 0.8% increase year-over-year. The gross margin (GM) for the quarter stood at 30.9%, compared to 32.4% in the fourth quarter of 2023.
Despite a relatively low utilization rate (UTR) of 65% during the same period, the company's specialty processes, including PMIC, RFSOI, and silicon interposers, contributed to a rise in specialty process revenue, accounting for 57% of the total in the first quarter.
Looking ahead, United Microelectronics anticipates an increase in wafer shipments by a low-single-digit percentage on a quarter-over-quarter basis, with firm average selling prices (ASP). The company has maintained its capital expenditure budget at $3.3 billion.
Additionally, United Microelectronics declared a cash dividend of NT$3 per share, which represents approximately a 61% payout and implies a dividend yield of around 6%. This announcement aligns with the company's financial strategy and provides a direct benefit to shareholders.
InvestingPro Insights
Following Citi's upgrade of United Microelectronics Corp (NYSE: UMC), a closer look at InvestingPro's real-time data and tips can offer additional insights into the company's financial health and stock performance. With a market capitalization of $18.75 billion and a price-to-earnings (P/E) ratio of 9.88, UMC trades at a low earnings multiple, which could indicate a potentially undervalued stock. The company also boasts a notable dividend yield of 5.85%, a testament to its commitment to returning value to shareholders, as evidenced by its track record of increasing dividends for 4 consecutive years and maintaining payments for 14 years.
InvestingPro Tips highlight UMC as a prominent player in the Semiconductors & Semiconductor Equipment industry with a history of profitability, including the last twelve months. The company's moderate level of debt and liquid assets surpassing short-term obligations suggest a stable financial position. Analysts predict UMC will continue to be profitable this year, which may reassure investors looking for sustainable returns.
For those interested in further analysis and additional InvestingPro Tips, UMC has 11 more tips available, which can be accessed at: https://www.investing.com/pro/UMC. To enrich your investment research, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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