Investing.com -- Goldman Sachs has identified its top picks in Japan's semiconductor sector, with analysts expecting strong upward revisions to earnings guidance across multiple companies.
The investment bank maintains "buy" ratings on all eight stocks in its coverage, citing improving fundamentals driven by capacity utilization increases, mix improvements, and stabilizing prices.
The firm anticipates that upcoming half-year results will confirm solid earnings trends and provide greater visibility into fiscal year 2027 performance across the sector.
Murata Manufacturing (Buy)
Goldman Sachs expects a second upward revision to full-year guidance at half-year results. The firm sees further earnings potential driven by utilization rate increases, mix improvements, and price stabilization for MLCCs.
President Norio Nakajima stated at CEATEC on October 13 that the BB ratio for MLCCs in July-September was just under 1.5 times, roughly matching the previous quarter. Details on additional capacity expansion are expected at the half-year results announcement.
TDK (Buy)
Goldman Sachs anticipates a significant upward revision to full-year guidance at half-year results. The firm expects solid earnings trends driven by mix improvements, including a higher pack ratio in batteries.
Positive factors include future expectations for BBUs contributing to revenue from the second half, rapid earnings recovery in HDD-related businesses, and profit improvements in passive components. The focus is on the next medium-term plan starting from fiscal year 2027.
Taiyo Yuden (Buy)
Goldman Sachs expects full-year guidance to remain roughly unchanged at half-year results following a significant upward revision after first quarter results. However, the company is in a phase where utilization rates are rapidly rising while MLCC prices stabilize.
The firm expects earnings to expand rapidly from first quarter to second quarter, with potential for major valuation improvement if sharp earnings improvement is confirmed.
Renesas Electronics (Buy)
Goldman Sachs expects third quarter calendar year results to exceed company guidance, with revenue continuing steady quarter-over-quarter increases into the fourth quarter.
The firm believes the stock's valuation could improve rapidly if earnings levels in third quarter and fourth quarter exceed consensus and earnings momentum increases in first half 2027.
Rohm (Buy)
Goldman Sachs expects a significant upward revision to full-year guidance at half-year results. The business environment is improving following the end of inventory adjustments, with higher sales and production likely to deliver stronger-than-expected earnings leverage. Inquiries for Si and SiC to AI and data centerapplications are very strong.
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