Jih Sun Securities Investment Consulting Co (日盛投顧) has raised its rating on Wiwynn Corp (緯穎科技) shares, saying that the cloud computing equipment supplier would benefit from persistent deployment demand for cloud-based data centers, while the industry trend remains positive in the long term.
The investment adviser upgraded its recommendation on the stock from “hold” to “buy” and raised the 12-month target price by 43 percent to NT$909 from the previous target price of NT$636, Jih Sun said in a research note on Friday.
“Looking at 2020, the order outlook for major customers Facebook Inc and Microsoft Corp are largely unchanged, but their revenue contribution will be affected by the coronavirus outbreak and further deferred,” Jih Sun analyst David Tseng (曾德瑋) said in the note.
“With the completion of Facebook’s data centers, demand for servers and storage equipment is expected to significantly increase, and Microsoft is also expected to increase its order pull-in this year, while the demand from new customers has not yet begun, which is likely to start in the first half of the year,” Tseng said.
Jih Sun did not specify the company’s potential new customers, but there has been market speculation that Amazon.com Inc is likely to become Wiwynn’s third major source of sales this year.
Jih Sun now expects Wiwynn’s revenue to increase 19.69 percent to NT$19.58 billion (US$644 million) this year from NT$16.36 billion last year, the note said.
The company, a subsidiary of Wistron Corp (緯創資通), reported revenue of NT$12.42 billion last month, down 32.38 percent from the previous month and 18.51 percent from a year earlier.
Wiwynn shares closed down 1.15 percent at NT$775 in Taipei trading on Friday.
Its share price has risen more than 22 percent so far this year, compared with the broader market’s 2.59 percent decline, as investors believe the firm will benefit from the cloud industry and rising corporate data-center demand.
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