Smartphone maker HTC Corp (宏達電) yesterday saw its market value drop by NT$69.5 billion (US$2.41 billion) in one day after the company was removed from Goldman Sachs Group Inc’s Conviction Buy List, citing intensifying competition in both smartphone and tablet markets.
The list is a group of stocks the US investment bank’s research team expects to outperform, based on either the size of the potential return or the likelihood of the realization of the return.
The 6.8 percent decline in HTC’s share prices yesterday took the Taoyuan-based company’s market value to NT$952.57 billion, falling behind Hon Hai Precision Industry Co (鴻海精密) to become the nation’s third--largest listed company, Taiwan Stock Exchange data showed.
As of yesterday, Taiwan Semiconductor Manufacturing Co (台積電), the world’s biggest contract chipmaker, remained the country’s largest company with a market value of NT$1.95 trillion. Hon Hai, the world’s largest contract manufacturer of electronics, had a market capitalization of NT$966.12 billion.
Goldman Sachs said in a report issued yesterday that HTC still enjoys long-term growth potential, but is facing rising competition in the smartphone and tablet computer markets, which may hamper the Taiwanese company’s growth momentum in the short term.
HTC introduced its first tablet, called the Flyer, in February, yet the Flyer has failed to grab consumer wallets as Apple Inc’s iPad did in terms of pricing and specifications, the report said.
“We believe in the near term HTC could face mild headwinds, especially in areas like tablets and mid-high end smartphones, suggesting HTC is less likely to significantly beat market expectations for the time being,” Goldman Sachs analyst Robert Chen (陳柏宇) said in the report.
As a result, Goldman Sachs revised downward its forecast of tablet computer sales’ contribution to HTC to less than 5 percent this year, from between 5 and 10 percent in its previous forecast.
A shortage of components from Japan following a devastating earthquake and tsunami on March 11 as well as the uncertainties in the global economy also pose risks to the company, the report said.
Goldman Sachs yesterday lowered its target price for HTC to NT$1,500 from NT$1,600, but retained its “buy” rating on the stock, indicating that investors could still load up on more HTC shares for better long-term returns.
Shares of HTC fell limit-down to close at NT$1,165, the lowest in the week. The stock has jumped 179.38 percent over the past 12 months, compared with a 23.06 percent rise in the benchmark TAIEX over the same period.
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