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Foreign brokerages cut target prices on E Ink shares

2012/04/28 21:12:31

Taipei, April 28 (CNA) Several foreign brokerages have turned cautious about the bottom line of E Ink Holdings Inc. and cut their target prices on the stock after the electronic paper display (EPD) developer swung to loss in the first quarter of this year.

E Ink posted NT$0.73 (US$0.02) in loss per share for the first quarter, compared with NT$1.19 in earnings per share recorded in the fourth quarter.

E Ink attributed the loss to the slow-season effect and inventory adjustments by its major customers during the period, which dragged down its gross margin to minus 23.1 percent from a positive 14.5 percent recorded a quarter earlier.

Shares of E Ink fell 7 percent, the maximum daily fall, to close at NT$31.70 on the Taiwan Stock Exchange Friday after it reported the worse-than-expected first results a day earlier.

Merrill Lynch said E Ink's sales in the second quarter and even in the second half of this year remained shadowed by market uncertainty, adding the EPD maker is likely to continue to incur losses in the second quarter with a loss per share of NT$0.54 and an operating margin of minus 12 percent.

Merrill Lynch said although the company may turn a profit in the second half of this year, it will be able to just break even for the entire 2012.

The brokerage has cut its target price on E Ink shares to NT$30 from NT$35, while maintaining an "underperform" rating on the stock.

After the first quarter loss posted by E Ink, JP Morgan has lowered its target price on the stock to NT$28 from NT$31 and also downgraded its forecasts of E Ink's earnings per share for 2012 and 2013 to zero and NT$1.1, respectively, from NT$3.1 and NT$2.4.

JP Morgan has reiterated an "underweight" recommendation on E Ink shares.

For its part, Barclays Capital said E Ink's first quarter results were disappointing and prompted the brokerage to cut its target price on the stock to NT$50 from NT$55.

However, the brokerage said with the launch of new tablet computer models, E Ink's sales momentum will pick up in the second quarter so it has maintained an "overweight" rating on the stock.

Goldman Sachs has slashed its forecasts of E Ink's earnings for 2013 and 2014 by 56 percent and 53 percent, respectively, by taking falling shipments into consideration.

The brokerage has cut its target price on E Ink shares to NT$23 from NT$32 and left a "sell" rating unchanged.

Meanwhile, Macquarie Securities has downgraded its target price on the stock to NT$30 from NT$35, while maintaining an "underperform" rating E Ink shares.

(By Lo Hsiu-wen and Frances Huang)
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