UBS AG yesterday said handset camera lens supplier Largan Precision Co (大立光) may see its revenue decline 1.4 percent this quarter from last quarter amid low industry visibility.
It also expects the company to report weaker-than-expected earnings for the first quarter due to reduced shipments to Apple Inc.
Largan is scheduled to report its first-quarter results tomorrow.
“Given the uncertainty in Apple’s product transition, we are concerned Largan’s shipments to Chinese handset makers in the second quarter may not fully offset Apple’s order adjustment given constraints in mobile DRAM and high-end display supply,” Arthur Hsieh (謝宗文), chief electronics hardware analyst at UBS, said in a note yesterday.
Largan’s revenue for this quarter is likely to reach nearly NT$5 billion after first-quarter sales totaled NT$5.1 billion, UBS forecast.
It may report net profit of NT$1.46 billion in the first quarter, which represents a decline of 49 percent from the previous quarter and is below the market consensus of NT$1.67 billion, UBS said.
Hsieh maintained a “neutral” rating on Largan’s shares, but lowered his target price to NT$730 from NT$800.
UBS is the second foreign bank to cut Largan’s target price in a week. On Thursday last week, Goldman Sachs trimmed its target price for Largan to NT$790 from NT$1,020.
Shares of Largan fell 1.69 percent to NT$696 yesterday.
Hsieh said Largan could see sales pick up in the third quarter on the back of new products from Apple and increasing 13-megapixel lens shipment to other clients.
"Nonetheless, we still need to monitor whether the low-cost iPhone could become popular and lead to lower lens average selling price and a decline in Largan’s share allocation among Apple’s suppliers," Hsieh said.
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