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HTC on track to meet Q4 sales target: Morgan Stanley

2012/12/10 12:52:14

Taipei, Dec. 10 (CNA) Taiwanese smartphone maker HTC Corp. is poised to meet its sales forecast for the current quarter in light of wider distribution of its new devices, U.S. brokerage Morgan Stanley said Monday.

HTC's sales growth will stem from the launch of its new smartphones, including the Droid DNA and Windows 8-based 8X/8S, as well as continued strong demand for its mid-range models in China, the brokerage said.

"We think wider distribution of new models makes the fourth-quarter sales target (NT$60 billion/US$2.06 billion) achievable," Jasmine Lu, a Morgan Stanley analyst in Hong Kong, wrote in a note to clients.

For the first quarter of 2013, Morgan Stanley raised its volume estimate for HTC from 7.3 million units to 8 million units, in reflection of the increasing production of HTC's new flagship model "M7."

The brokerage raised its target price for HTC to NT$333 (US$11.46) from NT$298 and maintained its "overweight" rating on the stock.

It also revised upward its estimates for HTC's earnings per share in 2013 by 11 percent to NT$26.52 and in 2014 by 13 percent to NT$28.57.

"It's early to conclude that HTC can return to its peak," Lu said. "But good feedback on new devices, U.S. smartphone demand re-acceleration from the fourth quarter, and an expanding premium Chinese market bode well for its share trend and operating leverage."

In the U.S. market, the initial positive feedback on the Droid DNA, launched through U.S. mobile provider Verizon Wireless, has helped rebuild HTC's brand recognition and led to its share gains, Lu said.

Another U.S. carrier AT&T Inc. also raised its sales target for the fourth quarter on rising consumers' interest in smartphones supporting super-fast long-term evolution (LTE) network, which could benefit HTC, Lu said.

In China, HTC could benefit from an expanding premium segment if the company successfully regains brand awareness in overseas markets, the analyst said.

The company's new Windows 8-based phones 8X/8S and its flagship HTC J Butterfly, launched through three major Chinese operators, should increase its product mix in the market for phones in the over-3,000 Chinese yuan (US$482) range, she said.

As of 11:31 a.m. Monday, HTC shares had climbed 3.56 percent to NT$276.5 on the local bourse.

The Taoyuan-based company said last week that it will launch its new high-end model -- the HTC J Butterfly -- in Taiwan on Dec. 11, three days ahead of the unveiling of Apple Inc.'s iPhone 5.

HTC said its new 5-inch flagship model, featuring an ultra-sharp display and the latest quad-core processor from Qualcomm Inc., will be launched in partnership with Chunghwa Telecom Co., Taiwan's largest telecom operator.

The HTC J Butterfly, which is expected to hit Japanese markets in mid-December, is the twin of the Droid DNA handset launched in the United States on Nov. 14.

(By Jeffrey Wu)