Two foreign brokerages have cut their target prices for Acer Inc (宏碁) in recent reports as the PC vendor faces growing competition and macroeconomic uncertainties.
US-based Morgan Stanley maintained an “equal weight” rating for Acer and cut its target price to NT$29 from NT$35, while Japan’s Nomura Holdings Inc kept a “reduce” stock rating and lowered its target price to NT$27 from NT$31.
“We see Acer’s losses turning around, but the recovery is slower than we expected,” Morgan Stanley analyst Grace Chen (陳星嘉) said.
“Macro risks are putting pressure on Acer’s recovery, and its structural issues make it more vulnerable to the changes in industry dynamics initiated by Apple Inc,” she said.
Acer’s competitors, such as Lenovo Group (聯想) and Asustek Computer Inc (華碩電腦), are also not immune to macro risks or changes in the industry, Chen said.
Asustek has a stable and profitable motherboard business that acts as a “cash cow,” she said, while Lenovo enjoys high market share in corporate PCs and China’s low-tier cities, where the barriers to entry are high.
Morgan Stanley expects Acer’s second-quarter sales to be flat or down slightly from the first quarter, with Acer’s third-quarter sales forecast to rise zero to 5 percent sequentially.
Nomura analyst Eve Jung (戎宜蘋) believes there will still be more downside risks for Acer, given the company’s slower-than-expected margin recovery and sluggish earnings outlook for the second half.
“From a long-term perspective, we think that it will still take time for Acer to strengthen its R&D capability for product innovation and differentiation,” Jung said.
“Acer faces rising competition from the top three PC OEMs [original equipment manufacturers], and we think that Acer’s margin will remain under pressure in the second half,” she said. “A turnaround story still seems far off.”
Moreover, Nomura said that Acer’s target to improve its operating margin to 2 percent in the second half of this year seems challenging.
Given Acer’s slow progress in adjusting its product portfolio and its lack of operating leverage, the Japanese brokerage expected Acer’s operating margin in the second half to be between 0.5 to 1 percent.
Acer shares closed down 3.02 percent at NT$28.9 on Friday.
SPEED OF LIGHT: US lawmakers urged the commerce department to examine the national security threats from China’s development of silicon photonics technology US President Joe Biden’s administration on Monday said it is finalizing rules that would limit US investments in artificial intelligence (AI) and other technology sectors in China that could threaten US national security. The rules, which were proposed in June by the US Department of the Treasury, were directed by an executive order signed by Biden in August last year covering three key sectors: semiconductors and microelectronics, quantum information technologies and certain AI systems. The rules are to take effect on Jan. 2 next year and would be overseen by the Treasury’s newly created Office of Global Transactions. The Treasury said the “narrow
SPECULATION: The central bank cut the loan-to-value ratio for mortgages on second homes by 10 percent and denied grace periods to prevent a real-estate bubble The central bank’s board members in September agreed to tighten lending terms to induce a soft landing in the housing market, although some raised doubts that they would achieve the intended effect, the meeting’s minutes released yesterday showed. The central bank on Sept. 18 introduced harsher loan restrictions for mortgages across Taiwan in the hope of curbing housing speculation and hoarding that could create a bubble and threaten the financial system’s stability. Toward the aim, it cut the loan-to-value ratio by 10 percent for second and subsequent home mortgages and denied grace periods for first mortgages if applicants already owned other residential
EXPORT CONTROLS: US lawmakers have grown more concerned that the US Department of Commerce might not be aggressively enforcing its chip restrictions The US on Friday said it imposed a US$500,000 penalty on New York-based GlobalFoundries Inc, the world’s third-largest contract chipmaker, for shipping chips without authorization to an affiliate of blacklisted Chinese chipmaker Semiconductor Manufacturing International Corp (SMIC, 中芯). The US Department of Commerce in a statement said GlobalFoundries sent 74 shipments worth US$17.1 million to SJ Semiconductor Corp (盛合晶微半導體), an affiliate of SMIC, without seeking a license. Both SMIC and SJ Semiconductor were added to the department’s trade restriction Entity List in 2020 over SMIC’s alleged ties to the Chinese military-industrial complex. SMIC has denied wrongdoing. Exports to firms on the list
ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip assembly and testing manufacturing (ATM) service provider, expects to double its leading-edge advanced technology services revenue next year to more than US$1 billion, benefiting from strong demand for artificial intelligence (AI) chips, a company executive said on Thursday. That would be the second year that ASE has doubled its advanced chip packaging and testing technology revenue, following an estimate of more than US$500 million for this year. ASE is one of the major beneficiaries from the AI boom as Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is outsourcing production of advanced chip
RSS