Morgan Stanley commented on Paradigm-KY (4966) as outperforming the broader market, with a target price of 825 yuan.

(picture taken from Parade official website)

[Financial Channel/Comprehensive Report] Parade-KY (4966), a high-speed transmission interface factory, held a law conference yesterday (8). Morgan Stanley (Morgan Stanley, Morgan Stanley) said that Parade’s Q1 financial forecast was better than expected. It is expected that Q2 revenue will gradually recover, and recovery is expected to be seen in the second half of the year, giving it an "outperform" target price of 825 yuan.

Parade’s earnings per share in Q4 were 5.60 yuan, a quarterly decrease of 54% and an annual decrease of 69%, 22% and 13% lower than the forecasts of Morgan Stanley and Wall Street respectively.

Affected by weak demand for notebook computers and the impact of China's blockade, revenue fell 31% quarter-on-quarter and 41% year-on-year, and gross margin fell below the forecast low of 44%.

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Parade expects this year's Q1 revenue to decrease by 10% quarterly to increase by 4% quarterly, because demand shows stability as new orders increase.

Gross margin is expected to be between 43-37%, but depends on the final production mix.

Parade also predicts that the inventory level will return to normal, and Q2 will return to 60-65 days.

Parade is expected to recover in the second half of this year, depending on seasonal factors and the most important new product cycle. Morgan Stanley believes that Parade's Q2 revenue will gradually recover.

Since October 2022, Parade stock has risen 60%, while the Taiwan stock market has risen 17% over the same period. Although the stock price is not cheap, Morgan Stanley believes that the stock may have bottomed out.

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