Largan Precision shares retain Buy rating as analyst forecasts steady revenue growth in 4Q24

On Monday, Goldman Sachs reiterated its Buy rating on Largan Precision Co Ltd (3008:TT) with a steady price target of NT$3,485.00. The firm's analysis indicates that Largan's fourth-quarter revenues for 2024 are projected to increase by 1% year-over-year, reaching NT$18 billion, despite a sequential quarterly dip of 5%.

This projection comes after Largan's November revenue matched Goldman Sachs estimates, and its October-November revenue totaled NT$12.6 billion, a 4% decline from the previous year but still in line with expectations.

Goldman Sachs highlighted that the October-November revenue tracked approximately 70% of the estimated revenue for the fourth quarter of 2024, which aligns with the historical range of 66% to 73% for the same period from 2021 to 2023. The firm anticipates that December will continue to show modest month-over-month revenue growth, with a forecasted 10% decrease compared to the 8% decline observed in November.

This expectation takes into account the typical seasonal slowdown and the normalization of market share for Largan's main customers' new smartphone model introduced in September 2024, as competitors' yield rates improve.

In terms of gross margins (GM), Goldman Sachs expects an increase to 51.3% in the fourth quarter, up from 50.5% in the third quarter. This improvement is attributed to a reduced proportion of periscope cameras in the new smartphone model launched by Largan's main customers in September 2024. Periscope cameras have been noted to carry lower gross margins due to the cost of purchased prisms.

The firm's forecast is based on the current trends and the competitive landscape within the smartphone industry, where Largan Precision holds a significant position as a supplier of camera components. Goldman Sachs' analysis reflects their expectations for Largan's financial performance as the year comes to a close.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.