On Friday, HSBC updated its financial outlook for Delta Electronics Inc. (2308:TT), increasing the shares' price target to NT$370.00, up from the previous NT$345.00. The firm continues to recommend a Buy rating for the shares, despite a slight reduction in earnings projections for the next two years.
The adjustment in the price target comes after Delta Electronics reported first-quarter results for 2024 that did not meet expectations. HSBC revised its earnings per share (EPS) estimates for 2024 and 2025, citing a 3.0% and 0.2% decrease, respectively. The new EPS forecast for 2025 stands at TWD15.20.
In justifying the revised price target, HSBC highlighted the anticipated stronger earnings contributions from the company's artificial intelligence (AI) segment. As a result, the firm has applied a higher price-to-earnings (PE) multiple of 24.4 times, compared to the prior 22.6 times.
The new price target of NT$370 implies a 19.5% potential upside from the stock's current trading price. HSBC's stance remains positive on Delta Electronics, as indicated by the maintained Buy rating. The firm's decision reflects confidence in the company's future performance, particularly in relation to its AI business.
InvestingPro Insights
As Delta Electronics Inc. (2308:TT) navigates through a challenging market environment, the latest data from InvestingPro provides a deeper understanding of the company's financial health and market position. The company has a market capitalization of $24.84 billion, underscoring its significant presence in the Electronic Equipment, Instruments & Components industry. This is complemented by a Price to Earnings (P/E) ratio of 25.04, suggesting that investors are willing to pay a premium for the company's earnings.
InvestingPro Tips highlight that Delta Electronics has maintained dividend payments for 28 consecutive years, signaling a commitment to shareholder returns even amidst earnings adjustments. Additionally, the company's liquid assets exceed its short-term obligations, providing financial stability and the ability to navigate economic fluctuations. With analysts predicting profitability for the year and a track record of profit over the last twelve months, Delta Electronics presents a compelling case for investors seeking a blend of stability and growth.
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