Several foreign brokerages raised their target prices yesterday on shares of Asustek Computer Inc (華碩), one of the world’s leading personal computer vendors, after the company reported better-than-expected earnings for the first quarter.
On Monday, Asustek posted NT$5.01 billion (US$171 million) in net profit for the January to March period, up 3 percent from the previous quarter and also up 46 percent from a year earlier, with earnings per share (EPS) at NT$6.65. The first-quarter operating margin stood at 5.2 percent, up from 4.7 percent recorded in the same period last year, it said.
Merrill Lynch said that with the launch of new products in the second quarter, Asustek’s operating margin is expected to rise to 5.3 percent in the second quarter, adding that it had upgraded its EPS forecast for Asustek by 7 percent to NT$27 this year and raised its target price on shares to NT$351 from NT$328, while reiterating a “buy” recommendation on the stock.
Asustek shares closed up 0.17 percent to end at NT$295.00 on the Taiwan Stock Exchange on Monday.
Asustek chief executive Jerry Shen (沈振來) said on Monday that the company is planning to unveil several tablet computers priced between US$199 and US$599, at the start of the second quarter, and aims to become the largest vendor of tablets operating on the Android system by the end of the third quarter.
Macquarie Securities said it expected Asustek to ship 2 million to 3 million tablets this year. The brokerage increased forecasts for the PC vendor’s EPS for this year and next year by 8 percent and 7 percent, respectively to NT$28.11 and NT$32.03, as well as upgraded target price on the stock to NT$336 from NT$286.
Meanwhile, BNP Paribas upgraded its target price on the stock to NT$340 from NT$302, RBS Securities raised its target price to NT$340 from NT$312, and Goldman Sachs upgraded its target price to NT$325 from NT$300.
Asustek said on Monday it aimed to return to the mainstream smartphone market by the end of this year, as the company plans to launch the “Padfone.”
The hybrid handset will support 4G networks and can be combined with a 10.1-inch tablet and a keyboard dock to provide the integrated functions of a phone, a pad and a notebook.
“The company sees the convergence of the three key products (notebook, smartphone and tablet) in the industry, and has strong products to compete in all three areas,” Barclays Capital analyst Kirk Yang (楊應超) said yesterday.