Several foreign brokerages have raised their target prices for Pegatron Corp (和碩) shares after the Taiwanese contract notebook computer maker reported better-than-expected results for the first quarter.
Bank of America Merrill Lynch said it was impressed by Pegatron’s first-quarter net profit, which was about 36 percent higher than market consensus.
Merrill Lynch said it has raised its target price for Pegatron shares from NT$38 to NT$61, which represents a 23 percent upside from the stock’s closing price of NT$49.5 yesterday.
On Thursday, Pegatron said it posted NT$2.73 billion (US$90.67 million) in net profit, or NT$1.18 in earnings per share (EPS).
In the first quarter, Pegatron’s gross margin rose to 5.2 percent from the previous quarter’s 5 percent, and its operating margin grew to 2.3 percent from 1.9 percent recorded in the previous quarter.
Merrill Lynch said that Pegatron’s first-quarter operating margin hit its highest level since the second quarter of 2010 and that it expects the company to see its operating margin keep growing on the back of its efforts to improve its product portfolio.
The brokerage has forecast that Pegatron’s EPS for this year and next year will hit NT$5.5 and NT$6.15 respectively, compared with NT$4.16 last year.
UBS Securities has also raised its target price for Pegatron shares to NT$56 from NT$42, and CLSA Asia-Pacific Markets has hiked its target price to NT$53.8 from NT$47.3, while Morgan Stanley has pushed up its target price for the shares to NT$55 from NT$50.
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