A U.S.-based brokerage raised its earnings estimates in 2015 and 2016 for the AU Optronics Corp (AUO)(NYSE: AUO) on Jan. 12, due to greater TV demand and easing pressure on panel prices.
The brokerage remains anonymous due to the new rules by Taiwan’s Financial Supervisory Commission, now that it is offering specific forecasts and numbers.
The brokerage has revised upward its earnings per share projections for AUO, the world’s fourth biggest flat-panel maker, by 44% to US$0.075 this year, and by 32% to US$0.06 next year.
The earnings per share revisions reflected the demand for new TVs and AUO’s capacity expansion plans, along with greater consumption power in the U.S. and the recent depreciation of the Taiwan dollars, the brokerage said.
“For full-year 2015, we expect balanced TFT-LCD industry supply/demand, and the pressure on panel prices should be mitigated,” the brokerage’s research note on Jan. 8 said.
It also said that AUO will benefit from upgrades in product offerings, such as large-sized, ultra-HD 4K, curved, and wide color-range panels, leading to a recovery of its operating margin to 7% in 2015 from 5% in 2014.
Meanwhile, the anonymous brokerage maintained an “overweight” rating on AUO shares and raised the price target for the stock from US$0.56 to US$0.73. An IHS DisplaySearch analyst said that prices for the 32-inch TV panels had risen 6% to 8% during the fourth quarter last year from a quarter earlier, while prices quoted for 40-inch and 50-inch TV panels had also gained 2% to 3% in the fourth quarter last year.
TV panels are the major revenue source for AUO and Innolux Corp (TPE: 3481), which are also the two largest flat panel makers in Taiwan, and they account for more than 40% of the total sales for flat panels.