Shares of Catcher Technology Co (可成) shares moved higher yesterday morning after a US brokerage upgraded its target price for the stock on optimism over its earnings outlook, dealers said.
The support for the stock also reflected strong buying by foreign institutional investors in the past month, providing additional evidence that Catcher, one of Taiwan’s leading metal casing suppliers, has strong earnings prospects, they said.
Catcher Technology shares rallied 3.41 percent to NT$288. The TAIEX climbed 0.66 percent.
“The brokerage’s report sparked interest in Catcher soon after the local bourse opened,” Marbo Securities Investment Consulting Co (萬寶投顧) analyst Chang Chih-cheng (張智誠) said. “I agree with the brokerage’s assessment because I think Catcher’s share price will continue rising as a result of its strong bottom line.”
In the research report released on Monday, the US brokerage said it has raised its target price on Catcher shares to NT$380 from NT$350, while leaving its “overweight” recommendation unchanged.
Aside from orders from Apple Inc, Catcher has received orders from non-Apple vendors that are starting to adopt metal casings, which could help Catcher this year, said the brokerage, whose name cannot be reported under new rules set by the Financial Supervisory Commission because it was offering specific forecasts.
In addition, Catcher is expected to secure large orders from Apple for the latest iPhone models, in particular the 4.7-inch iPhone 6 this year, while Apple is expected to account for 58 percent of Catcher’s total sales this year, up from 46 percent last year, the brokerage said.
The brokerage said the company could post NT$26.9 in earnings per share for this year, and NT$30.58 in earnings per share (EPS) for next year, up from NT$22 to NT$23 estimated by the market for last year.
In the first nine months of last year, Catcher’s EPS was NT$15.11, compared with NT$13.76 recorded over the same period in 2013.
“Judging from the brokerage’s upgraded target price and EPS forecasts, the stock’s valuation remains relatively low, as its bottom line will get stronger over the next couple years,” Chang said. “Due to its strong competitive edge in production technology, the stock is my top pick among local metal casing suppliers.”
Chang said the recent heavy buying by foreign institutional investors backed up the brokerage’s assessment.
Foreign institutional investors bought a net 18.66 million Catcher shares last month and an additional 2.04 million on Monday, the first trading session of this month.
“Foreign institutional buying could continue on lingering optimism over the company’s earnings,” Chang said.
In a statement released by Catcher on Monday, the company said it is planning to invest NT$902 million (US$28.6 million) to expand the production capacity of its plant in Jiangsu Province, China, to meet rising demand from its clients.
“Catcher is pouring more and more capital into expanding capacity, which shows that the company is upbeat about the orders it will receive,” Chang said. “It is a fundamentally sound company.”
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