Amid reports that Acer Inc (宏碁) will soon introduce ultra-slim laptops using Intel Corp’s consumer ultra low voltage (CULV) processors, coupled with its improving operating margins, Citigroup yesterday placed a “buy” recommendation on its shares, saying the company would outperform its peers in the global PC sector.
The US brokerage raised its target price for Acer shares to NT$62, an increase of 29.2 percent from its previous target level of NT$48, Citigroup said in a client note.
The new target price also indicated a 17 percent upside from the stock’s closing price of NT$53 in Taipei trading yesterday.
Acer shares have climbed 24.4 percent since the beginning of the year, compared with a 15.8 percent rise on the benchmark TAIEX over the same period.
“While we remain cautious about global PC industry growth in 2009, we expect Acer to outperform its peers on its cost competitiveness, improving product design and strong execution,” Citigroup Global Markets analyst Eve Jung (戎宜蘋) wrote in the note.
The upgrade came after Acer, the world’s third-largest personal computer vendor by shipments, reported strong fourth-quarter earnings because of the popularity of its low-cost laptops.
During the final quarter of last year, Acer’s net profit rose 17.1 percent from a year earlier to NT$2.81 billion (US$83 million), or NT$1.08 in earnings per share, after adjustments for employee bonuses, the company said in a statement on Tuesday. Operating margin, meanwhile, grew to 2.94 percent in the fourth quarter from 2.9 percent in the previous quarter, it said.
Citigroup said Acer should be the first among its peers to launch ultra-slim notebooks based on Intel’s new CULV solutions — which allow 58 percent reduction in chassis size, with competitive pricing between US$599 and US$699.
The Chinese-language United Evening News reported on Tuesday that Acer intends to hold a global launch of its new notebook models powered by CULV processors later this month in Beijing.
A channel check by Citigroup showed that Acer would have four new notebook models with CULV solutions and the company would place orders with major contract manufacturers including Quanta Computer Inc (廣達電腦), Inventec Co (英業達) and Wistron Corp (緯創).
“Quanta will be the supplier of the 11.3-inch model. Inventec will be the supplier of the 13-inch model and Wistron will be the supplier of the 14-inch and 15-inch models. We expect CULV notebooks to account for between 20 percent and 25 percent of Acer’s 2009 notebook shipments,” Jung said in the note.
Given its lower exposure in the 11-inch and 13-inch notebook segment, Acer is likely to see market share gains this year with the CULV platform launch, Citigroup said, adding that it expects Acer to resume growth momentum in the second quarter.