Two brokerage firms yesterday raised their share price target for Acer Inc (宏碁), after the world’s No. 4 PC brand returned to profit in the fourth quarter of last year following two consecutive quarters of losses.
Barclays Capital raised its price target for Acer to NT$55 (US$1.86) from NT$45, while Credit Suisse adjusted it up to NT$36 from NT$26.
Acer closed up 0.34 percent at NT$44.45 on the Taiwan Stock Exchange yesterday. The stock has plummeted 42.39 percent over the past 12 months, underperforming the electronics sub-index’s 9.97 percent drop.
Barclays said the Taiwanese PC firm remains one of its top picks in the Asia-excluding Japan IT hardware universe.
“We reiterate our ‘overweight’ rating following the fourth quarter’s results, with the company returning to profitability,” a Barclays report said.
Acer reported sales of NT$127.7 billion in the fourth quarter of last year, which was down 24 percent year-on-year, but up 8 percent from the previous quarter. Net profit in the fourth quarter was NT$75 million, compared with NT$3.9 billion a year ago.
Its sales beat the company’s guidance of a sequential drop of 5 to 10 percent and surpassed Barclays’ forecast of NT$106 billion.
However, Acer’s gross margin of 9.2 percent in the fourth quarter was below Barclays’ estimate of 10.4 percent.
Acer told a teleconference on Wednesday that its gross margin was expected to crawl back to the 10 percent level by the fourth quarter this year.
Barclays expected Acer’s operational turnaround to continue.
“Although the degree of improvements might depend on the macro economy and industry demand, we believe Acer will see sequential margin and profitability improvements throughout 2012,” the report said.
“We continue to expect ultrabooks to be the key growth driver this year, which could reach more than 35 percent of total notebook shipments in the fourth quarter this year. The channel inventory was cut to four to six weeks in the fourth quarter 2011, and should remain healthy for the rest of 2012,” it added.
Credit Suisse, on the other hand, said Acer’s PC market share loss had bottomed out and it expected the company to post an operating profit in the current quarter.