Taipei-Three foreign brokerages have raised their target prices for the stock of Taiwan-based smartphone camera lens supplier Largan Precision Co. (???) after the company posted a record net profit and gross margin in the fourth quarter of last year.
The three brokerages were bullish on Largan because of its efforts to improve its product portfolio by adding more high-end devices and by international smartphone brands' growing adoption of dual lens cameras that has strengthened the company's earnings.
An Asia-based securities house said it hiked its target price on Largan shares to NT$4,912.00 (US$155) from 4,400.00 after the company released its fourth quarter results on Thursday.
Largan's results had been closely watched by the market after investors rushed to buy into the stock in previous sessions amid optimism over the company's fundamentals.
On Friday, however, shares of Largan closed unchanged at NT$4,240.00, off an early low of NT$4,175.00, despite its record high EPS in the fourth quarter.
The stock encountered selling pressure early in the day as investors locked in gains built in recent sessions after the fourth quarter results were released.
In the October-December period, Largan posted a net profit of NT$8.45 billion, up 21.39 percent from a quarter earlier, with earnings per share at NT$62.99, compared with NT$51.89 in the third quarter.
Largan's gross margin improved to 70.65 percent from 67.96 percent in the previous quarter.
For the whole of 2016, Largan posted a net profit of NT$22.72 billion, down 6 percent from a year earlier, and an EPS of NT$169.40. The EPS was the second highest in the company's history, after the NT$180.08 recorded in 2015.
CNA cannot identify the brokerage because media outlets in Taiwan are not allowed to report the name of a foreign brokerage when it gives price forecasts for specific stocks.
The Asian brokerage, which maintained a "buy" rating on Largan shares, said it expects dual lens cameras to account for 10 percent and 17 percent of total lens sales for smartphone cameras in the global market in 2017 and 2018, respectively, up from only 3 percent in 2016.
Largan will benefit from such a trend, but its limited production capacity could put a lid on the company's sales and profit growth, the brokerage said.
It raised its forecasts for Largan's EPS by 2 percent and 11 percent for 2017 and 2018, respectively, to NT$248.67 and NT$297.07.
A European brokerage also kept its "buy" rating on Largan shares unchanged, while raising its target price for the stock to NT$4,900 from NT$4,100.
It also expected the growing adoption of dual camera lenses to continue to drive Largan's growth.
The European brokerage upgraded its forecasts for Largan's EPS for 2017 and 2018 by 6 percent and 12 percent, respectively, to NT$271.54 and NT$366.70.
A U.S.-based brokerage said Largan is expected to widen the lead over its peers in dual lens development, and raised its target price for Largan shares to NT$4,800 from NT$4,100 while leaving its "overweight" recommendation unchanged.
Source: Focus Taiwan News Channel