SinoPac Securities Investment Service Corp (永豐投顧) on Friday raised its 12-month target price for Accton Technology Corp (智邦科技) shares by 35 percent to NT$258, up from NT$191, on the back of a positive long-term outlook for the computer network and communication equipment supplier.
The new target price implies a 13.2 percent increase from the stock’s closing price of NT$228 in Taipei trading on Friday. Accton shares have surged 35.71 percent this year.
Unit shipments and output value of 400-gigabit (400G) switches industry-wide are expected to double next year, creating a strong upward lift for suppliers such as Accton starting in the second half of this year, the investment consultancy said.
Demand for 5G telecom applications from Chinese and European clients are also forecast to soar as 5G infrastructure building accelerates, SinoPac said in a research note.
“Accton will benefit in China from supply chain de-Americanization, particularly key components for core and backbone networks. Meanwhile, Accton started shipping access network devices to a European client and will benefit from clients’ 5G deployment,” SinoPac said.
Accton is the top supplier of white box switches in Taiwan. It is the largest shipper of 100G switches and has a leading position in 400G switches.
Its product lines are riding on industry growth trends, such as data centers and 5G, Yuanta Securities Investment Consulting Co (元大投顧) said.
“The company has closely cooperated with chip supplier Broadcom Inc, and enjoys a position comparable to Cisco Systems Inc and Arista Networks Inc, which entitles Accton to first-receive advanced chips testing services,” Yuanta wrote in a note on Aug. 14.
Yuanta has set a 12-month target price of NT$280 for Accton shares, citing a robust 400G switch outlook for next year and potential benefits from accelerating 5G deployment, despite headwinds caused by the COVID-19 pandemic.
Accton would see strong pull-in orders from data center customers for 100G switches and 400G switches would start ramping up on the back of its competitive products, while 4G and 5G demand by telecoms would increase next year, Yuanta said.
Accton’s net profit for the first half of this year rose 2.1 percent annually to NT$2.19 billion (US$74.2 million), while consolidated revenue in the first seven months dropped 3.45 percent to NT$28.47 billion, company data showed.
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