Sharp Surges on Deutsche Bank Upgrade

|
 |  About: Sharp Corp. ADR (SHCAY)
by: Steven Towns
Sharp Corp (OTCPK:SHCAY) is not alone among Japanese CE firms having a downward trending stock price in recent months. Japanese stocks have had an especially rough going since the Fed's May rate hike and are still trying to recover. Sharp may have gotten just what it needed: an analyst upgrade that calls out its cheap valuation and refocuses emphasis on its second LCD TV panel production plant that launches this autumn.

Deutsche Bank Securities upgraded Sharp to "buy" from "hold" with a target share price of 2,100 yen ($18.00). In Monday trading in Tokyo its ordinary shares (code: 6753) gained 4.38% to close at 1,836 yen ($15.76). On Friday its ADRs gained 1.69% to close at $15.00.

Sharp announces Q1 earnings tomorrow and is expected to report a 10% y-o-y operating profit increase.

The following is what I posted earlier today in a preview of Japanese CE firms Q1 earnings:

Regarding Matsushita and Sharp, Mizuho analyst Koichi Hariya said, "Both ... secured good profits from their flat TV operations in Japan. I wouldn't worry too much about their results. But their outlook is getting a little blurry. Flat TV prices seem to be falling faster after the World Cup."

UBS analyst Fumio Osanai said, "Price falls come hand in hand with volume growth. Matsushita just raised its plasma panel capacity by 50 percent. So it can offset softer prices with greater production. Sharp's next plant won't be operational by October. That will leave it in a tough situation."

Sharp Corp (OTCPK:SHCAY) 1-year chart: