Largan Precision shares plunge following UBS downgrade

Largan Precision, a major optical lens manufacturer, saw its stock price hit the daily limit downward, falling below the NT$7,000 mark following a rating downgrade by UBS.

UBS downgraded the company from 'buy' to 'sell', citing concerns that the stock's valuation has already priced in optimistic growth scenarios for Co-Packaged Optics (CPO) technology. While the long-term outlook for CPO remains positive, UBS noted that significant commercial opportunities for third-generation optical components may not materialize until 2028. Additionally, the current price-to-earnings ratio is significantly higher than the company's historical range.

Financial performance data shows Largan's August revenue was NT$5.012 billion, representing a 2.76% increase month-on-month but a 16.23% decrease year-on-year. To meet market expectations for a 36% to 38% quarterly increase, the company would require a substantial 73% revenue jump in September. The company expects September performance to exceed August, but UBS warns that flagship smartphone demand from major clients may remain flat due to rising memory costs.