Taipei--A European brokerage has raised its target price on shares of Taiwan-based smartphone camera lens supplier Largan Precision Co. (???) to NT$6,180 (US$203) because of the technology edge Largan has on its competitors.
In a research note, the European brokerage said Largan's advanced production technology and design ability will enable the company to ask for higher product prices and send its gross margin higher.
Because of that optimism, the brokerage raised its target price for Largan from the previous NT$4,950 to NT$6,180, the highest among foreign brokerages that follow the stock, and maintained a "buy" rating.
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.
On Friday, Largan, a supplier to Apple Inc., rose 3.17 percent to end at NT$4,875.00, the highest closing level in the stock's history, and remained the most expensive stock in the local market.
The all-time high closing price sent Largan's market capitalization to NT$653.9 billion, the highest in the company's history.
The stock has gained 10.5 percent since April 13, when it reported a sizzling gross margin for the first quarter despite slow season effects as part of its first quarter earnings briefing.
The first quarter gross margin -- gross profit divided by revenues -- rose from the previous quarter's 70.72 percent to a new high of 70.9 percent, beating market expectations of between 68.4 percent and 68.5 percent.
Largan said the higher gross margin reflected an improvement in production yield rates, demonstrating the company's strong capabilities in high-end lens production.
The European brokerage said Largan should benefit from its efforts to develop technology to produce more advanced plastic lenses to ensure that it will maintain a high gross margin in the upcoming years.
Largan should also get a boost from its efforts to develop 3D image sensor lenses, which carry a higher price tag, the brokerage said.
Source: Focus Taiwan News Channel