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Largan Precision shares tumble on news of rumored iPhone 6 specs

TAIPEI, Taiwan -- Shares of Largan Precision Co. (大立光) tumbled dramatically during trading yesterday, bottoming out after a near 7-percent drop shortly after noon as disappointed investors reacted to rumors that Apple's upcoming iPhone 6 handset would not be upgraded with a 13 megapixel (MP) camera.

The mobile device camera supplier's shares closed at NT$1,135 after rebounding from its intraday low of NT$1,105, losing NT$45, or 3.81 percent.

According to Nomura Securities (野村證券), Largan's recently lagging performance in the market is caused by rumors that Apple may adopt an 8 mega-pixel (MP) camera with improved optical image stabilization on its upcoming handset, instead of the 16 MP upgrade anticipated by industry observers. Apple's decision is based on the design requirement to retain the handset's more portable form factor, said Nomura Securities. In addition, the company's prospects are also expected to slump in the first quarter, with revenues expected to decline by 33 percent in the traditional slow season.

Largan retains a leading edge among competing suppliers, as even though the camera's pixel count remains the same, the company is among the few companies capable of coping with the complexity of the camera module, said Nomura Securities. The production of smaller-factored camera modules would require significantly improved optical aperture and resolution attributes, which are the company's competitive strengths, said Nomura Securities.

Nomura Securities raised the target price of Largan shares to NT$1,413, while Bank of America Merrill Lynch raised its target price to NT$1,440.

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