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Credit Suisse positive regarding first-quarter growth for HTC

TAIPEI--Taiwan's HTC Corp. could see stronger-than-expected momentum in its smartphone shipments next quarter on the back of its new flagship models, Swiss bank Credit Suisse Group AG said recently.

In a report dated Nov. 29, Credit Suisse wrote that HTC's shipments during the first quarter of 2013 could grow by 20 percent to 30 percent sequentially to between 8 million and 9 million units, which was higher than the bank's previous expectation of a flattish quarterly growth.

As a result, Credit Suisse maintained its “underperform” rating, but raised the stock's price target to NT$210 (US$7.22) from NT$190.

It added that the growth was likely to be driven by HTC's new flagship model — the high-end 5-inch Android phone called “M7” — shipments of which would begin from January next year, and the midrange 4.3-inch Android phone dubbed “528,” which would be shipped in cooperation with Chinese operators.

“We believe HTC is trying to take advantage of the window (of) opportunity before Galaxy S IV/iPhone 5S,” said Credit Suisse analyst Pauline Chen, referring to the next-generation smartphones from Samsung Electronics Co. and Apple Inc.

HTC's new phones could result in a “mid-teens” quarterly revenue growth of 15 percent, during the January-to-March period of 2013, indicating positive annual revenue growth during the first quarter, she said.

Despite potential growth in the near-term, Chen said, the sustainability of HTC's rebound remained questionable, given the intense competition it was facing from Samsung and Apple, and the increasing difficulty encountered in differentiating its products.

Additionally, Taoyuan-based HTC's execution needed to be observed after it had reported several quarters of disappointing earnings, Chen said.

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