Taipei, A U.S.-based brokerage has cut its target price on shares of Largan Precision Co., a supplier of smartphone camera lenses to Apple, to below the NT$3,000 (US$103) mark, citing weaker demand for the iPhone as one of the reasons for the downgrade.
In a research note released on Monday, the U.S. brokerage said it has lowered its target price on Largan shares to NT$2,800 from NT$3,200 after it cut its forecast of iPhone shipments for the first half of this year.
iPhone shipments from Apple, which accounts for about 40 percent of Largan's total sales, are expected to hit 52 million units in the first quarter, lower than the 55 million units the brokerage previously estimated.
In the second quarter, iPhone shipments are expected to reach 42 million units, a downgrade from the securities house's earlier forecast of 45 million units.
CNA cannot identify the brokerage because media outlets in Taiwan are not allowed to report the names of foreign brokerages when they give price forecasts for specific stocks.
On Tuesday, shares of Largan closed unchanged at NT$3,185 on the Taiwan Stock Exchange as bargain hunting helped the stock recover from an early low of NT$3,005.
The stock fell 4.93 percent on Monday, which sparked concerns that Largan shares could dip below NT$3,000 soon. It is already down 47 percent from its all-time intraday high of NT$6,075 seen in August 2017.
The brokerage said Apple is likely to adopt single lens cameras for its upcoming iPhones, which is not favorable for Largan because its biggest competitive edge lies in dual and multiple lens production.
It could therefore face fierce competition for Apple's new business from its rivals, including China-based Sunny Optical Technology (Group) Co., the brokerage said.
Sunny Optical is also expected to compete head to head with Largan for orders from Samsung Electronics Co. of South Korea, the brokerage added.
The brokerage said that under such unfavorable circumstances, Largan is expected to post only a low single digit increase in sales in 2018.
Largan shares have come under heavy selling pressure due to lingering worries over lower-than-expected demand for the premium iPhone X.
Between Jan. 1 and April 2, foreign and domestic institutional investors combined to sell a net 2.09 million Largan shares, lowering their stake in the company to 54.18 percent from 55.82 percent.
Source: Focus Taiwan News Channel