Taipei, The outlook by foreign brokerages on shares of Taiwan-based Largan Precision Co. has been mixed in the wake of the company's cautious fourth-quarter guidance.
The foreign securities houses issued target prices ranging from NT$2,850 (US$92.20) to NT$6,600 amid varying forecasts for Largan, a camera lens supplier to Apple Inc., after its fourth-quarter decline in orders.
On Friday, Largan shares closed up by the daily maximum 10 percent at NT$3,555.00, bouncing back from a 10 percent slump on Thursday, as the benchmark weighted index on the Taiwan Stock Exchange saw a technical rebound of 2.44 percent following its 6.31 percent plunge the previous day.
Largan stocks also attracted buying on Friday after the company posted a sequential increase of more than 50 percent in its third-quarter profit.
At an investor conference Thursday, Largan reported NT$8.37 billion in net profit for the July-September period, up 52.71 percent from a quarter earlier and 7.75 percent higher than a year earlier.
The company's third-quarter earnings per share was NT$62.41, compared with NT$41.01 in the second quarter.
However, Largan CEO Adam Lin (???) said he was cautious about the company's business outlook for the fourth quarter, citing shrinking demand among clients.
He said Largan saw a monthly drop in orders in October, and the decline is likely to be steeper in November.
According to a U.S-based brokerage, it was cautious about Largan's fourth-quarter outlook because the company's clients are expected to cut back orders in the fourth quarter to adjust their inventories.
By the first quarter of next year, however, Largan's sales momentum is likely to pick up as more and more international smartphone brands are expected to be using multiple camera lenses, the brokerage said. The brokerage said therefore that it was keeping its "overweight" rating on Largan shares but was lowering its target price on the stock from NT$6,200 to NT$6,000.
Meanwhile, a European brokerage maintained its "buy" recommendation and target price of NT$5,400 on Largan shares, saying it was optimistic about Largan's competitiveness in the areas such as advanced camera lens technology and 3D sensors.
Another American securities house said there was some uncertainty about whether Apple would use triple-lens cameras in its next generation of iPhones in 2019, which may affect Largan's shipments and bottom line next year.
In light of those concerns, the U.S. brokerage said, it was cutting its forecasts for Largan's earnings per share for 2018, 2019 and 2020 by 4 percent, 10 percent and 11 percent, respectively, to NT$188.5, NT$204.3 and NT$226.2.
It also lowered its target price for Largan shares from NT$3,300 to NT$2,850 but kept its "underweight" rating.
CNA cannot identify the brokerages because media outlets in Taiwan are not allowed to report the names of foreign brokerages when they give price-moving forecasts for specific stocks or the wider market.
Source: Focus Taiwan News Channel