Morgan Stanley yesterday cut its target price for Acer Inc (宏碁) amid concerns about falling demand in Europe, but maintained an “overweight” rating on the stock in light of the PC vendor’s efforts to penetrate China’s huge market.
The new target price of NT$100, down from its prior target of NT$106, implies a 12.6 percent upside from Acer’s closing price of NT$88.80 yesterday.
In a research note, Morgan Stanley said Acer was likely to report weakening sales in the fourth quarter of last year as demand in Europe was affected by a depreciating euro, a rising NT dollar and heavy snow.
The brokerage said these negative factors were expected to continue to affect sales and earnings in the first quarter of this year.
The weaker sales forecast for the fourth quarter are likely to “weigh on the share price in the near-term after a 15-20 percent rally [of the stock] in the fourth quarter,” Morgan Stanley said.
Morgan Stanley reduced its forecast for Acer’s earnings per share for last year by 4 percent and lowered the estimate for this year by 5 percent.
However, the launch of Intel’s new model and a growing China market are expected to offset the effects from Europe, it said.
The brokerage said the alliance between Acer and its Chinese counterpart, Founder Group (方正集團), was expected to deliver synergy and benefit the Taiwanese company this year.
Separately, Acer yesterday announced that its “Iconia Touchbook” had been voted one of the top 10 products in “The Ten Favorites” of the annual “Last Gadgets Standing” competition at the International Consumer Electronics Show in Las Vegas.
The 14-inch, Windows 7-powered Iconia is a dual-screened, multi-touch notebook that doubles as a laptop and a tablet device, according to a company statement.
Products represented in this competition were nominated by the writers of prominent news and blogger sites. The writers petitioned their readers to submit choices for products they considered the most innovative and useful that would be able to stand the test of time.
Finalists were presented in front of the live audience at the show on Saturday.
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