Shares of Delta Electronics Inc (台達電) hit their highest level in the company’s history yesterday, after brokerages including BNP Paribas and UBS raised their target prices on the stock to factor in the company’s promising sales guidance for this quarter and this year.
Shares closed up 6.86 percent at NT$187 (US$6.17) in Taipei trading yesterday, outperforming the benchmark TAIEX, which gained 0.73 percent.
On Wednesday, Delta told investors that it could achieve year-on-year growth in sales this quarter with a gross margin higher than 25 percent, because of a better product mix and client base expansion.
Full-year sales are expected to achieve stronger growth this year than the 3 percent increase recorded last year, driven by industrial automation products, passive components, networking products, cooling fans and telecom power supplies, Delta said.
“We forecast Delta’s sales will grow 10 percent year-on-year each in 2014 and 2015 on the back of double-digit year-on-year growth in its industrial automation products, passive components, power systems and networking products,” BNP Paribas Securities (Taiwan) Co Ltd analyst Charles Hsu said in a report.
Sales for this year are estimated to grow 10.23 percent to NT$195.18 billion from NT$177.05 billion last year, while net profit would expand 22.13 percent to NT$21.67 billion from NT$17.71 billion last year with earnings per share of NT$21.7, the brokerage forecast.
BNP has revised upward its target price to NT$203 from NT$185, with a “buy” rating for Delta’s shares.
UBS Securities Ltd has also upgraded its target price to NT$200 from NT$168, while maintaining its “buy” rating for the stock.
“We expect Delta’s industrial automation business could benefit from the ‘Internet of Things’ trend, given its wide range of product portfolio such as building automation solutions, energy management systems, real-time monitoring systems, power quality improvement systems and lighting systems,” UBS Securities said in a note.
UBS analyst Arthur Hsieh (謝宗文) said Delta would benefit from the Internet of Things as more everyday devices are equipped with low-cost sensors and actuators that can help improve their functionality.
The company’s sales would grow 13 percent annually to NT$200.06 billion this year, UBS said.
Daiwa Securities and JPMorgan Securities have also marked up their share target on Delta to NT$195 from NT$164 and to NT$195 from NT$170 respectively.
JPMorgan Securities Ltd analyst Gokul Hariharan said Delta may see sales from all of its product lines take off from next quarter as market demand picks up, after sales are set to fall by between 10 percent and 15 percent sequentially this quarter due to seasonal factors.