Shares of Catcher Technology Co (可成), a Taiwan-based metal casing supplier, took a beating for the second consecutive day on Tuesday after the company reported lower-than-expected second-quarter results, dealers said.
A move by several foreign brokerages, including UBS Securities, Deutsche Securities and Merrill Lynch, to cut their target prices for Catcher shares has made many investors wary of the stock, they said.
“Judging from the current selling orders for more than 50 million Catcher shares, I expect the stock will encounter a further sell-off following its disappointing second quarter earnings,” Horizon Securities (宏遠證券) analyst Benson Huang (黃重善) said.
Catcher shares fell more than 4 percent on Monday after the company announced over the weekend that earnings per share for the second quarter were NT$2.03, down 45 percent from the first quarter and down 41 percent from a year earlier.
The company’s EPS for the first half was NT$5.75, compared with NT$6.29 recorded a year ago.
The market had previously anticipated Catcher would post an EPS of NT$3.28 for the second quarter.
“The steep decline in EPS did surprise the market. Amid a weakening global economy, there are rising concerns over Catcher’s bottom line in the second half,” Huang said.
Huang said the disappointing second quarter results reflected the impact of a tax on Catcher’s retained earnings and foreign exchange losses, but added that core operating issues could carve into the second-half profit.
Due to falling global demand, Catcher has scaled back its capital expenditure plan for this year from NT$9 billion to NT$7.5 billion.
Shares in Catcher closed down 7 percent, the maximum daily decline, at NT$145.
The accelerated sales of Catcher shares yesterday came after foreign brokerages downgraded their target prices for the stock, Huang said.
UBS Securities lowered its target price to NT$170 from NT$230 and downgraded its recommendation on the stock to “neutral” from “buy.”
Deutsche Securities maintained a “hold” rating on the stock but lowered its target price from NT$190 to NT$175.
Merrill Lynch maintained an “underperform” recommendation on the stock and cut its target price from NT$184 to NT$156.
“To my knowledge, foreign institutional investors have been on the sell side in recent sessions due to cautious sentiment toward Cather’s earnings outlook,” Huang said.
On Monday, foreign institutional investors sold a net 1.73 million Catcher shares on the Taiwan Stock Exchange.