On Friday, HSBC revised its price target for Yageo Corp (2327:TT) (OTC: YAGOY), a leading electronic component manufacturer, to NT$656 from the previous NT$668. The firm continues to recommend a Buy rating on the stock.
The adjustment follows a slight reduction in the company's revenue forecast for the second quarter of 2024.
The bank has also updated its earnings per share (EPS) estimates for Yageo, projecting a 1.9% decrease for 2024 and a 2% decrease for 2025. Additionally, HSBC has introduced its EPS estimates for the year 2026. The new price target is based on a constant price-to-earnings (PE) multiple of 12 times, applied to the bank's 2024 EPS estimate of NT$54.63 for Yageo Corp.
HSBC's decision to maintain a Buy rating on Yageo is grounded in the expectation of the company's gross margin performance remaining robust, which should support the stock price even if market conditions worsen. The bank believes that despite the current slow pace of demand growth, the situation is likely to improve moving forward.
Furthermore, HSBC suggests that there is potential for Yageo to benefit from quicker-than-anticipated synergies from its sensor business, which could lead to further profit gains. The bank's target price implies an approximate 10.6% upside from the company's current stock price.
InvestingPro Insights
As investors consider HSBC's revised Buy rating and price target for Yageo Corp, the latest data from InvestingPro offers additional perspectives on the company's financial health and market performance. With a market capitalization of $3.03 billion and a price-to-earnings (P/E) ratio of 20.85, Yageo appears to be maintaining a stable valuation in the market. This is further underscored by the company's revenue growth over the last twelve months as of Q3 2024, which stands at 8.36%.
Moreover, Yageo's commitment to shareholder returns is evident through its track record of dividend payments, having maintained them for 11 consecutive years. The current dividend yield is at 1.55%, with a growth of 6.67% in the same period. These financial metrics suggest a company that is not only profitable but also prioritizes consistent returns to its investors.
InvestingPro Tips highlight that Yageo is a prominent player in the Electronic Equipment, Instruments & Components industry, and analysts have revised their earnings upwards for the upcoming period. This optimism is shared by the market, as the stock is trading near its 52-week high, reflecting investor confidence in the company's future prospects.
For those looking to delve deeper into the company's analytics, InvestingPro provides additional tips on Yageo Corp, accessible through the platform at https://www.investing.com/pro/2327. And for a limited time, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking even more valuable insights that can inform investment decisions.
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