Several foreign brokerages have cut their target prices on Largan Precision Co (大立光) shares, as the supplier of smartphone camera lenses to Apple Inc expressed caution about second-quarter sales.
Although Largan reported that sales last month rose 48.26 percent month-on-month and 38.67 percent year-on-year to NT$5.44 billion (US$180.7 million), the company on Thursday told investors that client demand has declined this month and is to worsen next month.
In a research note, a Japanese brokerage said that Largan’s caution came after the company accounted for the effects of the COVID-19 pandemic on the global market.
The Japanese securities house said that it has lowered a target price on Largan shares to NT$5,000 from NT$6,000, expecting that the company’s net profit this year would fall about 12 percent from a year earlier.
Another Asian brokerage said that Largan’s caution toward the second quarter came after its Android phone clients cut orders to the Taiwanese supplier due to concerns over the effects of the pandemic on the smartphone market.
The brokerage said that while demand for low to mid-range smartphones remains solid, Largan, which has commanded the lead in high-end smartphone camera lenses, has no immediate plan to compete in the low to mid-range smartphone segment.
That is why the securities house said that it has cut a forecast of the company’s second-quarter sales by 31 percent to NT$13.1 billion, down 1 percent from a quarter earlier and 7 percent from a year earlier.
The brokerage has lowered its target price on Largan shares to NT$4,810 from NT$5,730.
A third brokerage based in Asia said that uncertainty over the smartphone market could lead Largan’s clients to scale back their orders, adding that it has lowered a target price on Largan shares to NT$4,000 from NT$5,400.
Largan on Thursday posted NT$6.72 billion in first-quarter net profit, a 33 percent increase from a year earlier, but down 17 percent from a quarter earlier, with earnings per share of NT$50.1, while consolidated sales rose 34.52 percent from a year earlier to NT$13.21 billion.
Largan shares fell 3.03 percent to close at NT$3,685 on Friday, underperforming the broader market, where the TAIEX closed up 0.38 percent at 10,157.61 points.
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