Goldman Sachs reiterated its sell Novatek with a target price of 305 yuan.

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[Financial Channel/Comprehensive Report] The latest report from Goldman Sachs stated that although Novatek (3034), the leading driver IC manufacturer, will release positive news, the inventory level will drop from 111 days in Q3 in 2022 to 98 days in Q4 , is expected to continue to decline with the increase in terminal demand, but Goldman Sachs believes that pricing competition will continue to affect Novatek's profit margin outlook. Although it raised its 12-month target price from 228 yuan to 305 yuan, because this is higher than the current stock price 18% lower, so reiterate the "sell" rating.

Novatek held a law conference on the 7th. The Q4 performance in 2022 was better than Goldman Sachs' expectations. For Q1 2023, Novatek expects revenue to remain flat or slightly increase quarter-on-quarter, which is also higher than the market and Goldman Sachs' expectations.

In addition, inventories are also falling sharply and are expected to return to reasonable levels.

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However, Goldman Sachs believes that although Novatek's 2023 Q1 financial forecast shows that its gross profit margin is 37.5~39.5%, which is basically in line with expectations, the management said that pricing pressure is still there, especially in the TDDI (panel drive and touch panel) of smartphones. integrated single chip) business.

Goldman Sachs reiterated its thesis that price competition among TDDI players will intensify when supplies are abundant.

Goldman Sachs pointed out that the current strong stock price rebound of Novatek may reflect the expectation of recovery. As of the 7th, its stock price has rebounded by about 70% from the recent lowest point. Out" rating, 12-month target price raised from 228 yuan to 305 yuan.

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