Despite sales rebound, foreign brokerages remain cautious about HTC

Although smartphone brand HTC Corp. (???) posted a more-than 40 percent month-on-month sales increase in September, several brokerages remain cautious about the firm's bottom line and expect the company to report losses for the third and fourth quarters.

Among the downbeat foreign securities houses, one U.S. brokerage said that the effect of HTC's newly launched smartphones, such as the HTC One A9s, the HTC Desire 10 Lifestyle and the HTC Desire 10 Pro, which were said to serve as drivers for its September sales growth, are expected to fade from November.

In addition, contract production of Google's Pixel smartphone series, which was unveiled earlier this month, is unlikely to boost its profitability too much, the brokerage said.

Amid caution toward HTC's earnings prospects, the U.S. brokerage said it is possible that HTC will incur losses for the second half of this year after the company registered NT$6.87 (US$0.22) in loss per share in the first half of the year.

As a result, the brokerage said that it has maintained a target price of HTC shares at NT$48 and has left unchanged an "underweight" recommendation on the stock.

Under Taiwanese regulations, CNA is prohibited from reporting the names of foreign brokerages when they give price forecasts for specific stocks.

On Friday, HTC shares extended momentum from the session earlier on the back of a strong rebound in sales for September, up 0.67 percent to close at NT$89.70. The market was closed Monday for the Double Ten National Day holiday.

In its latest sales report, HTC said that its consolidated sales for September reached NT$9.33 billion, up 41.8 percent from the previous month. The September figure was also up 31.35 percent year-on-year.

Nonetheless, HTC's consolidated sales still fell 41.72 percent in the first nine months of this year from a year earlier, to NT$55.91 billion, an indication of escalating competition in the global smartphone market.

In addition to the effect of the newly unveiled models and contract production services provided to Google, HTC also got a boost from its efforts in promoting its first virtual reality headset -- the HTC Vive -- which went on global sale in April.

However, an Asia-based brokerage said that the Vive sales were just a small fraction of HTC's total revenue and that the figure was not "real" at all in terms of the smartphone brand's bottom line.

The Asian brokerage said it has maintained a target price of NT$41 on HTC shares, while urging investors to cut their holdings in the stock.

Also cautious about the HTC Vive sales, a European brokerage said that HTC is expected to sell about 140,000 units in the third quarter, unchanged from the second quarter. The forecast was shy of a previous market estimate of more than 180,000 units.

The European brokerage said it has also maintained a "sell" rating on HTC shares, while leaving unchanged a target price of NT$41 on the stock.

Source: Focus Taiwan News Channel