HTC Corp (宏達電) shares plummeted by the 10 percent daily limit to NT$83.6 in Taipei trading yesterday, hitting the lowest level in the company’s history, after the firm unexpectedly forecast a quarterly loss.
A total of NT$7.61 billion (US$243.32 million) of the smartphone maker’s market value evaporated, leaving NT$69.13 billion yesterday, from NT$76.74 billion on Friday last week.
The firm said in a statement released on Friday that it would lose between NT$9.7 and NT$9.94 per share this quarter, rather than earnings of NT$0.06 and NT$0.34 per share as estimated earlier this year.
HTC also slashed its sales guidance by nearly 30 percent to between NT$33 billion and NT$36 billion from the previous estimate of between NT$46 billion and NT$51 billion, citing rising competition, a change to the product mix and reduced scale.
Following the change of guidance, some brokerages lowered their target prices for HTC, citing the firm’s deeper-than-expected financial forecast cut.
“This quarter’s guidance cut might not come as a surprise for a weak brand, but the magnitude and timing are unexpected and will deepen worries of deteriorating fundamentals and management credibility,” Morgan Stanley analyst Jasmine Lu (呂智穎) said in a note released on Sunday.
The company just held a general shareholders’ meeting on Tuesday, three days prior to the quarterly guidance revision, Lu added.
Lu slashed HTC’s target price from NT$105 to NT$57, a reduction of 45.71 percent.
UBS Securities Pte Ltd analyst Arthur Hsieh (謝宗文) said the main reason behind the significant financial revision was management’s overconfidence in their abilities and failure to acknowledge the stiff competition in the smartphone market.
Hsieh has almost halved UBS’ target price for HTC from NT$100 to NT$52.
He expects HTC’s revenue and profit to further deteriorate due to intensifying competition in the market.
Yuanta Securities Investment Consulting Co (元大投顧) warned that there is little chance of a comeback for HTC when the company misses consumer demand and product cycles, citing the firm’s disappointing sales of its flagship smartphone, the One M9, and weak sales performance in the Chinese market.
The One M9 and its variations are apparently vulnerable, not just to Apple Inc and Samsung Electronics Co’s smartphones, but also to products from Chinese brands Huawei Technologies (華為) and Xiaomi Corp (小米), Yuanta analyst Jeff Pu (蒲得宇) said in a note yesterday.
The analyst said he lowered the price target for HTC to NT$68 from NT$115 to reflect the extremely poor earnings visibility and concerns of further earnings downside.
“To stage a turnaround, we still believe HTC will need to be more connected to non-handset devices, such as virtual reality headsets,” Pu said.
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