Robinhood shares gain on Q2 beat, as user and crypto growth accelerate
On Thursday, BofA Securities analyst Robert Cheng shifted the rating for Advantech Co Ltd. (2395:TT) from Underperform to Neutral and increased the price target to NT$405.00, up from the previous NT$295.00. The revision is based on the anticipation of a 16-22% sales and 20-26% earnings per share (EPS) year-over-year growth for the years 2025-2026. This growth is expected to be driven by stronger than usual first quarter guidance for 2025, an optimistic outlook due to the rising influence of edge AI in vertical markets, and increased capital expenditures in Taiwan and the United States.
Cheng’s analysis led to a 9-10% elevation in the earnings forecast for 2025-2026 and the introduction of projections for 2027. The price objective was raised to NT$405, which corresponds to a 30 times multiple of the estimated EPS for the second half of 2025 to the first half of 2026, from the earlier NT$295 based on a 27 times multiple of the estimated 2025 EPS. The valuation adjustment includes a rollover and an increased price-to-earnings (P/E) multiple of 30 times, which is 1.5 standard deviations above the historical average since 2013, reflecting the expected sales and earnings growth along with the growing contribution from edge AI technology.
Despite the upgrade to Neutral, Cheng refrained from assigning a Buy rating to Advantech. Two main reasons were cited for this decision: firstly, the company’s high valuation, currently trading at 33 times the estimated 2025 P/E, which is already at a historical peak compared to the historical average of 21 times; and secondly, the ongoing uncertainty in the macroeconomic environment, which could affect the adoption rate of edge AI technology.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.