Taipei, March 11 (CNA) Shares of Taiwan-based smartphone vendor HTC Corp. moved sharply higher Tuesday morning on optimism over initial preorder sales of its newly unveiled middle-end model -- the Desire 816 -- in China, dealers said.
The buying also reflected Deutsche Bank's move to upgrade its target price and recommendation for HTC shares as the bank praised the smartphone supplier's strategy to target the booming middle range market, they said.
Net buying in HTC shares by foreign institutional investors on Monday also encouraged investors to pick up the stock soon after the local bourse opened, dealers added.
As of 11:17 a.m., shares of HTC had gained 3.91 percent to NT$146.00 (US$4.82), with 13.42 million shares changing hands. The weighted index on the Taiwan Stock Exchange was up 0.33 percent at 8,694.26.
"I think HTC is moving in the right direction by targeting the middle range smartphone market, in particular in China, to offset the impact of fiercer than ever competition in the high-end market," Asia Securities Investment Consultant analyst Chang Chih-cheng said.
According to the Apple Daily, sales of HTC's Desire 816 exceeded 450,000 units in the first three days of its preorder campaign in China, and the number was expected to hit 500,000 units soon. The report said the data showed that the new model has received a warm welcome in the huge China market.
"Many investors are anticipating that HTC could benefit from the China market to boost its sales in March, helping the company achieve its sales guidance for the first quarter of this year," Chang said. "It was no surprise that HTC shares staged a strong rebound today."
At an investor conference held on Feb. 11, HTC said its consolidated sales for the first quarter will range between NT$34 billion and NT$36 billion, down 16-21 percent from the NT$42.9 billion in sales in posted in the fourth quarter of 2013.
In the first two months of the year, HTC's consolidated sales totaled only NT$16.9 billion. "Despite the weak sales in the two-month period, HTC has not revised its sales forecast yet so I expect its sales for March will make a leap to catch up its guidance," Chang said. Chang said foreign institutional investors' net purchase of 1.92 million HTC shares on Monday showed that foreign investors were betting that the smartphone vendor will hit a turning point and were willing to raise their holdings in the stock.
Deutsche Bank upgraded its target price on HTC shares to NT$155 from NT$85 and changed its rating for the stock to "hold" from "sell." The bank is the first foreign brokerage to revise its recommendation and target price for HTC shares upwards.
In addition to the Desire 816, Deutsche Bank said HTC will see sales stage a rebound after it launches a new flagship model that will be unveiled on March 25.
Chang said that if HTC shares are able to quickly overcome the nearest technical resistance at around NT$148.00, the stock could continue to move higher and challenge NT$161.
(By Esme Jiang and Frances Huang)