A major US-based brokerage firm has raised its earnings estimates for this year and next year of AU Optronics Corp (AUO, 友達光電), the world’s No. 4 flat-panel maker, due partly to greater TV demand and easing pressure on panel prices.
Under new rules set by the Financial Supervisory Commission, the name of the brokerage cannot be reported because it offers specific forecasts.
The brokerage has revised upward its earnings per share (EPS) projections for AUO by 44 percent to NT$2.4 this year and by 32 percent to NT$2.4 next year.
The EPS revisions reflect demand for new TVs and AUO’s capacity expansion plans, along with greater consumption power in the US and the recent depreciation of the New Taiwan dollar against the US dollar, the brokerage said.
“For this year, we expect balanced TFT-LCD industry supply and demand, and the pressure on panel prices should be mitigated,” the brokerage wrote in a research note on Thursday last week.
It said that AUO would thus benefit from upgrades in product offerings such as large-sized, ultra-HD 4K, curved and wide color-range panels, leading to a recovery of its operating margin to 7 percent this year from 5 percent last year.
The brokerage maintained an “overweight” rating on AUO shares and raised the price target for the stock from NT$17 to NT$22.
AUO shares closed down 0.81 percent to NT$18.35 yesterday, outperforming the TAIEX, which fell 0.4 percent.
Analysts at research firm IHS DisplaySearch said that prices of 32-inch TV panels rose 6 to 8 percent in the fourth quarter from a quarter earlier, while prices quoted for 40-inch and 50-inch TV screens also gained 2 to 3 percent.
TV panels are the major revenue source of AUO and Innolux Corp, the two largest flat panel makers in Taiwan, accounting for more than 40 percent of their total sales.
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