Bank of America Merrill Lynch has raised its target price for Asustek Computer Inc (華碩電腦) shares, backed by an optimistic outlook for the Taiwanese computer maker’s tablet products and margin growth.
In a research note dated Friday, the bank revised its tablet shipment forecast for Asustek this year from 8.8 million to 10.2 million units, higher than the company’s shipments of 6.3 million units last year.
As a result of the revision, Merrill Lynch lifted its target price on Asustek shares to NT$389 (US$13) from NT$358 while maintaining its “buy” rating on the stock.
“Looking at 2013, the company will have a full range of tablets with a better margin profile given the higher contribution from its own-brand tablets,” Robert Cheng (鄭勝榮), a Taipei-based analyst at Merrill Lynch, wrote in the note.
“Despite the much lower margin for its Nexus 7 last year, the model helped boost Asustek’s scale, brand awareness and channels in the tablet market,” he said, referring to Asustek’s 7-inch tablet co-branded with Google Inc.
In addition to the new tablet and smartphone launch last month at the Mobile World Congress (MWC) tech fair in Spain, Cheng said he expects Asustek to refresh its touch notebook lines at Computex in June, which should drive the company’s sales momentum in the second half of this year.
Shares in Asustek closed up 1.81 percent at NT$366.5 on Friday in Taipei.
Asustek unveiled its Fonepad tablet on Monday last week at the MWC, the most important gathering of the mobile industry, to challenge rivals such as Samsung Electronics Co.
The 7-inch Fonepad, equipped with Intel Corp’s new Atom Z2420 processor and third-generation (3G) cellular capability, is set to go on sale from this month at US$249 for an 8GB model in the Asia-Pacific markets and at 219 euros (US$291) for a 16GB model in Europe.
Another Asustek product launched at the MWC is the PadFone Infinity, a 5-inch smartphone that can be integrated into a 10.1-inch tablet, which further blurs the lines between the two kinds of mobile devices.
Asustek has set this year’s sales goals at 24 million notebooks, 12 million tablets and 1 million smartphones.