Yuanta Securities Investment Consulting analyst Jeff Pu says that Largan's sales last month were below expectations due to a lower demand for iPhones, a smaller portion of iPhone 6 Plus models, and weak demand from Chinese handset brands.
“February will be affected by fewer working days, and we don’t expect much of a recovery in March owing to the fast-falling number of iPhone [shipments],” said Pu, who maintains a downgrade rating on Largan and a price target of NT$2,650.
Pu says that camera specifications of the next iPhone, presumably called the iPhone 6s, will stay the same at 8 megapixels which limits potential catalysts to push Largan’s stock price higher in the second half of the year.
While migration to 8MP and 13MP lenses will likely remain strong among Chinese vendors of mid-tier and low-end phones, upgrades to 16MP and 20MP for flagship smartphones is said to be slow given a limited supply of CMOS sensors.
“On the other hand, we expect the specification migration in high-end models to be from new features, such as optical image stabilization and fast autofocus, which benefit module makers more than lens makers, in our view,” Pu said.
Notably, Apple has been rumored to be working on a major update to the iPhone's camera that features a dual-lens system. It's possible that the company would still utilize 8MP camera modules for this new feature.
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