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HTC target price trimmed over Q4 sales forecast

TAIPEI -- Foreign investors have trimmed their target prices of Taiwan-based smartphone vendor HTC Corp. after the company gave a disappointing forecast for sales in the fourth quarter at an investor conference on Oct. 26.

U.S. brokerage J.P. Morgan Securities cut HTC's target price to NT$100 (US$3.42) per share, the lowest among foreign brokerages, in its latest report released Monday. HSBC Securities cut its price to NT$140.

Deutsche Bank AG and Barclays lowered their estimates to NT$200 and NT$175, respectively, and each maintained its rating of “hold” and “underweight” for HTC.

HTC shares fell by 6.99 percent on the Taiwan Stock Exchange and closed at NT$219.5 Monday.

HTC's sales will probably not improve until the 2013 Mobile World Congress, the world's largest exhibition, conference and networking event, according to J.P. Morgan's report, which also said HTC may come up with a merger plan to expand its operations.

The U.S. firm's forecasts for the handset maker's earnings per share (EPS) this year and over the next two years were NT$19.63, NT$7.21 and NT$5.54.

At the investor meeting, HTC said that its sales will likely fall to NT$60 billion in the fourth quarter from NT$70.2 billion recorded in the third quarter.

Several brokerages have predicted HTC might only break even in the fourth quarter.

Deutsche Bank AG said the company's future sales performance will depend on whether it will be able to return to its previous scale and renew its marketing strategies.

HTC is expected to release flagship smartphone models in the first quarter of 2013 and might cooperate with social networking sites Facebook or Sina to make its products stand out in the market, the Germany-based brokerage said.

Meanwhile, HSBC said in a report that despite an increase in HTC's third-quarter shipping in China, its global shipping declined by over 10 percent, while that of its arch rival Samsung surged by more than 10 percent.

This indicates HTC's global market share has dropped, the report said.

HSBC lowered its forecast for HTC's operating profit margin in 2012 to 6.5 percent and after-tax EPS from NT$6.38 to NT$0.95.

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