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Foreign brokerages raise target prices on Compal shares
Central News Agency
2014-05-10 09:38 PM
Taipei, May 10 (CAN) Several foreign brokerages have raised their target prices on shares of Compal Electronics Inc. after the Taiwan-based contract notebook computer maker reported better-than-expected first quarter results. One of the optimistic brokerage houses, Barclays Capital, said in a research note Friday that Compal's first quarter earnings per share of NT$0.57 (US$0.02) were higher than its forecast of NT$0.43, largely due to an improvement in the company's product mix. Expecting Compal to sustain its momentum, Barclays hiked its target price for the company's shares from NT$17 to NT$30, the highest value predicted by any foreign brokerage that tracks the stock. Shares of Compal rose 2.24 percent to close at NT$22.85 on the Taiwan stock exchange on Friday after the company's first quarter results were released a day earlier. The weighted index ended down 0.46 percent. Compal posted NT$2.61 billion in net profit in the January-March period, up 1 percent from the previous quarter, with its EPS little changed, defying the conventional wisdom that the first quarter is a slow season for the PC industry. In the three-month period, Compal's gross margin rose to 4.3 percent from 3.97 percent in the fourth quarter and 3.93 percent in the same period of last year. Barclays said the first quarter gross margin beat the brokerage's forecast of 4.1 percent because mobile devices accounted for more of the company's shipments and the Chinese yuan's depreciation against the U.S. dollar helped bring down operating costs. The brokerage also upgraded its recommendation on Compal shares to "overweight" from "underweight, while raising its forecast of Compal's EPS for 2014 and 2015 by 21 percent and 38 percent, respectively, to NT$2.58 and NT$2.98. Equally optimistic over the stock, CLSA Asia-Pacific Markets hiked its forecasts of Compal's EPS in 2014 and 2015 by 15 percent to NT$2.14 and NT$2.37, respectively. The brokerage has also raised its target price for the stock to NT$24.8 from NT$21.5, while revising its rating to "outperform" from "underperform." Citigroup Global Markets raised its target price on Compal shares to NT$28 from NT$25 and maintained a "buy" rating, while Bank of America Merrill Lynch hiked its target for the stock to NT$27.5 from NT$26 and kept its "buy" recommendation. (By Lo Hsiu-wen and Frances Huang)
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