It turns out that there are a couple of “this last happened in 2011” moments I’m going to write about in this article. The first is that I spent my own money on an iOS product. Actually it might have been two. And the second is that UK bank, Barclays, had a better-than-underweight verdict for HTC stock. By an underweight recommendation, this meant that the bank’s investment analysts believed that if HTC were not going to achieve their estimates, it would likely be by undershooting. Barclays have now adjusted their recommendation from “underweight” to “overweight,” meaning that should HTC’s business not be equal to the estimates, it will be because they have exceeded them.
Barclays have cited a few reasons for the upgraded recommendation, chiefly HTC’s grasp of the business they’re involved in, their understanding of material and manufacturing costs, healthy cash deposits, an improving patent portfolio and solid partnerships with global telecom operators. Essentially, in 2014 HTC (finally) refocused their portfolio towards the mid-range and as such, stopped competing with Apple, which Barclays reckon is a lost cause. Their analysts also believe HTC is well positioned to benefit from the Internet of Things (IoT) and wearable technology. These three points are interesting, because whilst the gadget freaks amongst us are expectantly waiting for an eyeball burning specification for the unannounced HTC M9 Hima, it’s the mid-range models that Barclays believes will sell well. And whilst HTC have not talked about the IoT as Samsung have, nor announced glamorous plans to equip coffee makers with their own in-house operating system, instead they have launched the Re Camera, a connected device that could have a role in Internet-of-Things. Oh and we’re yet to see a wearable device from HTC, with stories circulating last year that HTC shelved their Android Wear plans because they had nothing new to give to the market. I have to ask myself: what have Barclays seen that we have not?
Regardless, their upgraded recommendation and target price up to NT$200 (from NT$100, and the stock was trading at around NT$156 as at the time of writing) is not a recommendation from Android Headlines that you should go out and buy the shares! Instead, it seems that the market’s opinion of HTC is improving. And we must not forget that HTC’s business has suffered from a very difficult few years and there could be an element of Barclays believing that most of the bad news is behind them now.