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HSBC Securities raises rating, target price on HTC shares
【Economics】2013-04-26  18:41:12
Taipei, April 26 (CNA) HSBC Securities has raised its recommendation and target price for HTC Corp. shares on optimism over sales of the Taiwan-based smartphone vendor's latest flagship model -- the new HTC One.

In a research note issued Friday, HSBC Securities said demand for the new HTC One in the U.S. market appears to be strong, with the model apparently impressing many consumers since being launched in February.

In addition, the brokerage said, HTC has made a concerted effort to improve its product portfolio, which is expected to help the smartphone supplier improve its bottom line.

In a huge reversal, HSBC Securities upgraded its recommendation to "overweight" from "underweight" on HTC shares and raised its target price on the stock to NT$326 (US$10.98) from NT$140.

HSBC Securities is the fifth foreign brokerage to increase its target price for HTC shares to more than NT$300, after J.P. Morgan Chase, Daiwa Securities, Goldman Sachs and BNP Paribas.

Shares of HTC fell 1.60 percent to close at NT$277.50 on Friday as investors pocketed gains built earlier in the session on improving sentiment over HTC's earnings outlook.

In the first quarter of this year, HTC posted NT$0.10 in earnings per share after the company missed its NT$50 billion to NT$60 billion sales target, posting only NT$42.8 billion in consolidated sales largely because of a component supply shortage.

In the previous quarter, HTC had an EPS of NT$1.21 on consolidated sales of NT$60 billion.

According to foreign institutional investors, the component supply shortage previously suffered by HTC has been resolved to some extent after the company added more certificated manufacturers to its supply chain to boost production.

HSBC Securities said HTC's top high-end models, the new 4.7-inch new HTC One and the 5-inch HTC Butterfly launched in the fourth quarter of last year, could account for 50 percent of HTC's total sales in the second quarter and lift the company's average selling price during the period.

HSBC Securities also forecast that increased sales could lift HTC's operating margin to more than 7 percent, compared with 0.6 percent in the fourth quarter.

(By Esme Jiang and Frances Huang)
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