HTC shares plunge on pes­simistic Q3 forecast

The China Post - - LOCAL -

Shares of Tai­wan- based smart­phone ven­dor HTC Corp. ( ) came un­der heavy down­ward pres­sure Fri­day af­ter the com­pany gave a gloomy forecast a day ear­lier for its per­for­mance in the third quar­ter, deal­ers said.

The cur­rent selling also re­flected the low­er­ing of tar­get prices for HTC shares by sev­eral for­eign bro­ker­ages, which sparked fears that for­eign in­sti­tu­tional selling of the stock will ac­cel­er­ate, they said.

As of 11 a.m., shares of HTC had lost 10 per­cent, the max­i­mum daily de­cline, to NT$63.00, with 2.22 mil­lion shares chang­ing hands. The weighted in­dex on the Tai­wan Stock Ex­change was down 0.25 per­cent at 8,428.45.

At an in­vestor con­fer­ence Thurs­day, HTC said the com­pany would likely post a loss per share in the July-Septem­ber pe­riod rang­ing be­tween NT$5.51NT$5.85, af­ter post­ing a loss per share of NT$ 9.7 quar­ter.

“The forecast for HTC to post such a high loss per share has caught many in­vestors off guard, and that’s why the stock faced heavy selling to fall 10 per­cent soon af­ter the main board opened,” Hua Nan Se­cu­ri­ties an­a­lyst Kevin Su said.



Bear­ish Sen­ti­ment

Su said that when the stock hit the down­ward limit, there were still or­ders from in­vestors to sell 7.5 mil­lion HTC shares. “I ex­pect that the stock’s weak­ness will con­tinue as mar­ket sen­ti­ment to­ward the com­pany’s oper­a­tions has be­come bear­ish,” he said.

HTC said the com­pany is fac­ing a prod­uct tran­si­tion pe­riod dur­ing the cur­rent quar­ter but is hop­ing that a “hol­i­day hero” will be un­veiled in the fourth quar­ter to re­verse the un­fa­vor­able trend.

“Sev­eral smart­phone brands, in­clud­ing Ap­ple Inc., have is­sued lower- than- ex­pected guid­ance for the third quar­ter and HTC

can­not es­cape it,” Su said.

Non- core Busi­ness Losses

“But such a large loss es­ti­mated by HTC leads me to sus­pect that the com­pany will suf­fer non­core busi­ness losses that will fur­ther un­der­mine its bot­tom line in the third quar­ter.”

On July 21, Ap­ple said it ex­pected its sales for the cur­rent quar­ter to range be­tween US$ 49 bil­lion and US$ 51 bil­lion, lower than an ear­lier mar­ket forecast of US$ 51.1 bil­lion. The forecast sent Ap­ple shares into a tail­spin.

Fol­low­ing HTC’s in­vestor con­fer­ence, sev­eral for­eign bro­ker­ages trimmed their tar­get prices for the stock amid fears that HTC will not turn a profit in 2015, and the down­grade dealt another blow to the smart­phone brand’s per­for­mance on the main board Fri­day, Su said.

In the first half of the year, HTC posted a loss per share of NT$9.27, and it could suf­fer a loss per share of NT$15 in the first nine months of the year if the third quar­ter forecast proves ac­cu­rate.

Share Price Cut to NT$ 45

A U.S.-based bro­ker­age cut its tar­get price on HTC shares from NT$100 to NT$ 45, the low­est level among the for­eign in­sti­tu­tional in­vestors track­ing the stock. The U.S. bro­ker­age main­tained its “un­der­weight” rec­om­men­da­tion on HTC shares.

Tai­wanese reg­u­la­tors for­bid lo­cal media to re­veal the names of for­eign bro­ker­ages when they give price fore­casts of spe­cific stocks.

A Ja­panese bro­ker­age cut its rat­ing on HTC shares to “un­der­per­form” from “neu­tral” and low­ered its tar­get price to NT$60 from NT$70, while a Euro­pean bro­ker­age main­tained its “sell” rec­om­men­da­tion and cut its tar­get price to NT$46 from NT$52.

“So wise in­vestors should keep their hands off the stock for now. I do not see any im­me­di­ate tech­ni­cal sup­port,” Su said.

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