Shares of touchpanel supplier TPK Holding Co (宸鴻) surged by more than 5 percent yesterday after analysts at Barclays Capital Securities raised their target price on the stock by nearly 82 percent on a better outlook over the next two years.
In a client note, the brokerage retained its stock rating on the touchpanel supplier at “overweight,” but raised its stock price target to NT$400, from the NT$220 it previously set.
On the Taiwan Stock Exchange, TPK shares rose 5.71 percent to close at NT$231.5, outperforming the broader market, which increased 0.67 percent yesterday. At one point, the stock advanced by the maximum daily limit to NT$234 before paring gains on profit-taking.
TPK was the worst-performing stock in Taiwan last year, falling 65.69 percent over the year.
Barclays analysts said that they were upbeat about the firm’s sales and margins due to structural factors.
“We turned more structurally positive on TPK, as we expect it to regain its lead over the medium term with the help of three new game-changing drivers,” Barclays analysts Jamie Yeh (葉婉屏), Sebastian Hou (侯明孝) and Andrew Lu (陸行之) said in the note.
One of the three “game-changing drivers” is the growing number of wearable devices for which TPK would be the sole touchpanel supplier, analysts said.
TPK’s proprietary touch-on-lens products with full lamination could also make it a key supplier to Apple Inc’s high-end iPad Mini, in addition to other tablets that also use the firm’s touchpanel products, they said.
In addition, the demand for pressure-sensitive touchscreens would mean more orders for high-end iPhones from Apple in the second half of next year, they added.
Barclays said that it believes the company’s outlook would be better than it previously predicted, adjusting its earnings per share estimate by 5 percent for this year and by 33 percent for next year.
However, Yuanta Securities Co (元大證券) is cautious about the company’s near-term outlook, saying it is still premature to take a position in TPK shares now.
"iWatch could be an interesting catalyst from late this year, but with the delay of the bigger size 12.9-inch iPad, it somewhat dilutes the potential benefit of the iWatch," Yuanta analyst George Chang (張家麒) said in a separate note, adding that the increasing competition in smartphone market would continue adding pressures on TPK’s margins.
TPK is scheduled to hold an investor conference on April 22 to reveal detailed financial figures.