Brokerages cut target prices on Acer Inc. to below NT$20
CNATAIPEI--Several foreign brokerages have cut their target prices on shares of Acer Inc. to below NT$20 (US$0.67) after the Taiwan-based personal computer vendor reported worse-than-expected results for the second quarter.
August 11, 2013, 12:02 am TWN
Goldman Sachs lowered its target price on Acer shares to NT$15 from NT$20 because of concerns that Acer was putting too much emphasis on touch notebook computers while lagging behind in developing tablet computers and smartphones.
Goldman said that if demand for PCs remains weak, the Taiwanese company could see its competitiveness eroded further.
On Friday, shares of Acer fell 1.70 percent to NT$20.20 following a 7-percent plunge a day earlier after the company reported on Wednesday a loss per share of NT$0.13 in the second quarter, well off its NT$0.19 in earnings per share a quarter earlier.
The reported loss scared off many investors because the market had previously expected Acer to post a small net profit or break even in the second quarter.
According to industrial research firm Gartner, Acer's share of the global PC market fell to 8.3 percent in the second quarter from 11.4 percent in the same period of last year.
While worldwide PC shipments for the April-June period fell 10.9 percent from a year earlier, Acer's shipments shed 35.3 percent year-on-year, Gartner said.
Acer said the second-quarter losses largely reflected added spending on strengthening its design capabilities and an increase in dynamic random access memory chip prices during the period.
The company said it expected to break even in the quarter, with shipments of mobile PCs, including notebooks, netbooks and tablets, growing by as much as 5 percent from the second quarter.
Goldman left its “sell” recommendation on Acer shares unchanged, while projecting Acer's EPS to be NT$0, minus NT$0.09 and NT$0.06 in 2013, 2014 and 2015, respectively. In 2012, Acer posted NT$1.07 in loss per share.
Joining Goldman, Credit Suisse also cut its target price on Acer shares to NT$16 from NT$21 and kept its “underperform” rating unchanged, while UBS Securities lowered its target price to NT$16 from NT$18 and maintained a “sell” recommendation.
Meanwhile, Bank of America Merrill Lynch and BNP Paribas cut their target prices on Acer shares to NT$19.5 and NT$18.5, respectively, from NT$22 and NT$21.7.
Merrill Lynch maintained its “underperform” rating on Acer shares, while BNP Paribas left its “underweight” recommendation unchanged.