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U.S. brokerage raises target price on Largan shares

2019/02/12 16:20:56

Taipei, Feb. 12 (CNA) A U.S.-based brokerage has raised its target price on shares of Taiwan-based Largan Precision Co., a supplier of smartphone cameras to Apple Inc., after the Taiwanese manufacturer reported better-than-expected sales for January.

In a research note, the American securities house said the January sales largely reflected an improvement in Largan's product portfolio as more and more international smartphone brands rushed to adopt multi-camera lenses in their models, despite weaker-than-expected demand for the latest iPhone models unveiled in September.

The brokerage has hiked a target price of Largan shares to NT$4,200 (US$30.85) from NT$4,100 and left an "overweight" rating on the stock unchanged.

On Tuesday, Largan shares rose 0.63 percent to close at NT$4,000.00 on the Taiwan Stock Exchange, where the benchmark weighted index ended up 0.93 percent at 10,097.74.

Last week, Largan reported that its consolidated sales for January totaled NT$3.35 billion, up 4 percent from a month earlier.

The latest sales report beat the company's sales guidance, which expected January revenue to stay little changed from a month earlier.

The January sales represented a mild rebound from December, when Largan's revenue plunged 19.49 percent from November at a time of disappointing sales of the latest iPhones.

The brokerage said Largan is expected to benefit from an increase in orders placed by smartphone brands in the Android camp due to demand for triple camera lenses in their new models.

In the upcoming Mobile World Congress, which will open Feb. 25 in Barcelona, Spain, several smartphone brands such as South Korea's Samsung Electronics Co. and China's Huawei Technologies Co., are expected to launch new advanced models, according to the brokerage.

Other Chinese brands including OPPO and Vivo are expected to unveil new models in the second quarter of this year, a move likely to increase Largan's shipments.

While demand for iPhones appears disappointing at present, Largan said it remains upbeat about its business over the longer term.

The company spent almost NT$3 billion in late January to buy two lots of land in two industrial parks in Taichung to build new plants to expand its production capacity.

CNA cannot identify the brokerage 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 Han Ting-ting and Frances Huang)