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Foreign brokers raise HTC share targets on turnaround forecast

2014/05/07 13:36:41

Taipei, May 7 (CNA) Foreign brokerage firms have raised their price targets for HTC Corp. after the Taiwanese smartphone maker forecast a profitable second quarter thanks to strong demand for its new products.

"We are impressed by HTC's 2Q14 guidance of returning to the black especially on the increasing scale and operating expense efficiency improvement," Arthur Hsieh, chief electronics hardware analyst at UBS Securities, said Wednesday in a note to clients.

"We believe the better time-to-market of HTC One M8 has significantly helped the sales revenue this year as consumers no longer need to wait for HTC to resolve component supply constraints," he said.

HTC's aggressive pricing strategy for its mid-tier Desire series and online distribution, meanwhile, have effectively broadened the company's potential market, Hsieh said.

The analyst upgraded his rating on HTC shares to "neutral" from "sell" and raised his price target for the stock to NT$180 (US$5.98) from NT$97. He also estimated HTC's earnings per share at NT$4.70 in 2014, NT$7.92 in 2015 and NT$8.94 in 2016.

HTC forecast Tuesday that its second-quarter consolidated revenue will be between NT$65 billion and NT$70 billion, which would be roughly double that of the previous quarter, and it estimated EPS at NT$2.21 to NT$3.00.

Germany's Deutsche Bank AG upgraded its rating on HTC shares from "hold" to "buy" and revised its price target from NT$155 to NT$250, citing sales strength from the successful launches of the flagship M8 and mid-tier Desire 816.

The bank has raised its second-quarter shipment forecasts for the M8 from 2.5 million units to 3.5 million and for the Desire 816 from 1.5 million units to 1.8 million.

It also expects HTC to ship 8.5 million units of the M8 and 3.5 million units of the Desire 816 for all of 2014.

The bank said a survey of the industry suggested that among the new products HTC could launch late in the second quarter or early in the third quarter are an HTC "A9" mid-price model with high specifications and the M8 mini.

They could also include two or three smartphones with MediaTek chips made by Chinese ODMs for the China market and a Nexus tablet co-branded with Google Inc.

These new devices should help HTC's third-quarter sales keep up with sales in the second quarter, compared with a quarterly decline of 23 percent to 33 percent in the same quarters the past two years, according to Deutsche Bank.

Other brokerages also raised their target prices for HTC shares. Goldman Sachs Group Inc. increased its target price from NT$150 to NT$163, Nomura Securities revised its forecast from NT$138 to NT$158 and Credit Suisse Group AG went from NT$97 to NT$110.

Shares in HTC had fallen 2 percent to NT$171.5 as of 11:05 a.m. Wednesday in Taipei.

(By Jeffrey Wu)
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