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Foreign brokerages cut target prices on Catcher shares

2018/12/08 21:49:23

Taipei, Dec. 8 (CNA) Several foreign brokerages have cut their target price on shares of Taiwan-based metal casing maker Catcher Technology Co. after it reported a monthly sales drop of more than 25 percent for November.

An Asian brokerage said Catcher, a supplier to Apple Inc., fell victim to weaker than expected global demand for the iPhone XR, which was unveiled in September.

As a result, the brokerage said in a research note, it was lowering its target price on Catcher shares to NT$300 (US$9.74) from NT$370, and downgrading its recommendation on the stock to "outperform" from "buy."

On Wednesday, Catcher reported a 25.1 percent monthly decline in its consolidated sales for November to NT$9.62 billion, falling short of market expectations of over NT$10 billion. Its November sales were also 13.3 percent lower than a year earlier.

In the first 11 months of the year, Catcher posted NT$88.71 billion in consolidated sales, up 5.6 percent year-on-year.

In the wake of its November sales report, Catcher shares fell 9.89 percent Thursday to close at NT$237.00 on the Taiwan Stock Exchange and dropped another 0.42 percent Friday to end at NT$236.00.

Due to the lower than expected iPhone XR sales, the Asian securities house said, Catcher is likely to continue to face decreasing demand.

As a result, the brokerage said, it had cut its forecasts for Catcher's earnings per share for 2018 by 4.6 percent to NT$38.94, and for 2019 by 9.9 percent to NT$36.46.

Another Asian brokerage said Catcher's November sales were reflective of a slow season for the company. The brokerage therefore decided to cut its target price on Catcher shares to NT$265.50 from NT$369.00, and lower it rating on the stock to "underperform" from "buy."

It also downgraded its forecast of Catcher net profit for 2018 by 6.3 percent to NT$29.19 billion and for 2019 by 10 percent to NT$28.41 billion.

An American brokerage, meanwhile, said it expected Catcher's consolidated sales for December to fall by a monthly 15-20 percent and its fourth-quarter sales to drop by a quarterly 22 percent. Catcher's operating margin -- the difference between sales and the cost of goods sold and operating expenses - is likely to shrink 0.4 percentage points to 32.7 percent, the brokerage said.

It also lowered its target price on Catcher shares to NT$255 from NT$380 and its recommendation on the stock to "natural" from "overweight."

The U.S. brokerage said that if demand for iPhones remains weak, Catcher's operating margin for the first half of next year is likely to contract to 28-29 percent.

CNA cannot identify the brokerages because media outlets in Taiwan are not allowed to report the names of foreign brokerages when they give price-moving forecasts for specific stocks or the wider market.

(By Jeffrey Wu and Frances Huang)