US bank ups Asustek target price on tablet hopes

In a research note dated March 1, the bank revised its tablet shipment forecast for Asustek in 2013 from 8.8 million to 10.2 million units, much higher than the company's shipments of 6.3 million units last year.

As a result of the revision, Merrill Lynch lifted its target price on Asustek shares to NT$389 (US$13) from NT$358 while maintaining its “buy” rating on the stock.

“Looking at 2013, the company will have a full range of tablets with a better margin profile given the higher contribution from its own-brand tablets,” Robert Cheng, a Taipei-based analyst at Merrill Lynch, wrote in the note.

“Despite the much lower margin for its Nexus 7 in 2012, the model helped to boost Asustek's scale, brand awareness and channels in the tablet market,” he said, referring to Asustek's 7-inch tablet co-branded with Google Inc.

In addition to the new tablet and smartphone launch in February at the Mobile World Congress (MWC) tech fair in Spain, Cheng said he expects Asustek to refresh its touch notebook lines at Computex in June, which should drive the company's sales momentum in the second half of 2013.

Shares of Asustek closed up 1.81 percent at NT$366.5 Friday in Taipei.

Asustek took the wraps off its Fonepad tablet Feb. 25 at the MWC, the most important gathering of the mobile industry, to challenge rivals such as Samsung Electronics Co.

The 7-inch Fonepad, equipped with Intel Corp.'s new Atom Z2420 processor and third-generation (3G) cellular capability, will go on sale from March this year at US$249 for an 8GB model in the Asia-Pacific markets and at 219 euros (US$291) for a 16GB model in Europe.

Another Asustek product launched at the MWC is the PadFone Infinity, a 5-inch smartphone that can be integrated into a 10.1-inch tablet, which further blurs the lines between the two kinds of mobile devices.

Asustek has set 2013 sales goals at 24 million notebooks, 12 million tablets and 1 million smartphones.

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