On Tuesday, Goldman Sachs (NYSE:GS) maintained a positive stance on Aspeed Technology Inc (5274:TT) shares, raising the price target to NT$4,600 from NT$4,200, while reiterating a Buy rating on the stock. The adjustment reflects a new valuation based on an updated target price-to-earnings (P/E) ratio.
The investment firm's analyst has updated the target P/E ratio to 35 times, up from the previous 32 times, aligning it with the company's ten-year average P/E from 2015 to 2024.
This change is applied to the estimated earnings per share (EPS) for the year 2026 and is then discounted back to the estimated 2025 figures at a cost of equity (CoE) of 13.2%, which remains unchanged from prior assessments.
The revised price target suggests a 26.2% upside potential for Aspeed Technology shares. The calculation for the CoE includes several key assumptions that have not been altered: a beta of 1.5 as sourced from Bloomberg, a risk-free rate of 4.0%, and a market risk premium of 6.25%, which is consistent with the Goldman Sachs house view.
The firm's approach to setting the price target for Aspeed Technology involves a forward-looking analysis that considers the company's projected financial performance and market conditions.
The CoE plays a crucial role in this analysis, as it helps determine the discount rate used to estimate the present value of the company's future earnings.
Goldman Sachs' updated price target for Aspeed Technology is based on a comprehensive evaluation of the company's long-term financial averages and current market assumptions.
The firm's unchanged CoE assumptions provide a stable framework for the revised valuation and the maintained Buy rating indicates continued confidence in the stock's performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.