Several foreign brokerages have raised their target prices on Largan Precision Co Ltd (大立光) shares after the smartphone camera lens supplier reported a higher-than-expected gross margin for the first quarter of this year.
Credit Suisse is one of the foreign brokerages which have been upbeat about Largan’s earnings prospects. Credit Suisse said that the firm will continue to take advantage of its lead over its peers in high-end camera lens production technology to secure a high gross margin. The European brokerage has raised its target price for Largan shares to NT$3,280 from NT$2,940, while leaving an “outperform” rating on the stock.
After Largan released its first quarter results on Thursday, shares rose 0.9 percent to close at NT$2,810 on Friday in Taipei trading, outperforming the broader market, which ended down 0.88 percent.
Largan announced a first-quarter gross margin of 56.7 percent, up about 6 percentage points from the previous quarter, beating market expectations.
Market analysts said that Largan has benefited from an improvement in its product portfolio.
Largan posted NT$32.86 in earnings per share (EPS) for the first quarter of this year, also beating an earlier market estimate.
The first-quarter figure rose from NT$22.36 in the same period last year, while it fell from NT$55.4 registered in the previous quarter due to slow-season effects.
Expecting that Largan will be able to maintain a high gross margin, Credit Suisse has raised its forecast of the smartphone camera lens maker’s earnings per share by 4 percent and 14 percent this year and next year respectively to NT$162 and NT$194.
Last year, EPS stood at NT$144.85.
Barclays Capital has also raised its forecast of Largan’s EPS for this year and next year by 3 percent and 10 percent respectively to NT$164.18 and NT$212.55 amid similar optimism.
As a result, Barclays has hiked its target price on Largan shares to NT$3,200 from NT$3,000 and maintained an “overweight” recommendation.
Also, CIMB Securities has boosted the target on Largan shares to NT$3,000 from NT$2,950, and left an “overweight” rating unchanged, while Nomura Securities raised its target price to NT$3,054 from NT$3,000, leaving a “buy” rating intact.
CLSA has maintained its target price on Largan shares at NT$3,460, the highest among the foreign brokerages so far.
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