Taiwan-based smartphone vendor HTC Corp. (2498.TW) appears to be suffering some static. There’s nothing wrong with its transceivers; market reception appears to be the problem here.
According to research firm Gartner, mentioned in this Oct. 4 Reuters article, “HTC’s share of the global smartphone market has plummeted from a peak of 10.3% in the third quarter of 2011 to 2.6% in the most recent quarter” as the market has turned disproportionately toward Apple and Samsung for their devices.
HTC’s reception problems lie with investors. The chart below shows the company’s stock price plotted against the StarMine Price Momentum model score history. On a regional basis, the stock is now ranked in the bottom 1% of all companies when examined across long-term, mid-term, short-term and industry price momentum. Stocks tend to move in the same direction as their 12-month price trend.
Source: Eikon / StarMine
A wallflower at the dance
The StarMine Smart Holdings model suggests that HTC will continue to fall from favor among institutional investors. This predictive measure examines regulatory filings from institutional investors to determine which characteristics are currently favored by investors as a whole, as suggested by the stocks they’ve chosen to own. It, in a sense, attempts to reverse-engineer investors’ stock selection screens. Among some of the most popular current categories such as value, price momentum, growth and analyst revisions, HTC scores especially poorly. Therefore its Smart Holdings score of just 4 out of a possible 100 predicts the stock will experience even lower institutional ownership in the future.
Source: Eikon / StarMine
Consensus is sliding
Sell-side sentiment has also become more negative. After the company recently reported its first quarterly net income loss of nearly 3 billion Taiwan dollars (and much worse than the 1.8 billion loss analysts were expecting), analysts responded by aggressively slashing their full-year 2014 estimates. The change in the consensus can be seen below on the blue line and currently stands at a loss of 0.82 Taiwan dollars.
StarMine SmartEstimate, which re-weights consensus to place more weight on more accurate analysts and more recent estimates, is lower still (gold line) at -1.57. Noteworthy is that within the last month, two 5-star rated analysts, the highest rating given to analysts for their historical forecasting accuracy for HTC, are well below even the SmartEstimate.
The company has recently shuffled senior management responsibilities and refreshed its product offerings. But, as often happens with tech companies (most recently, BlackBerry), once a brand falls from favor, it’s extremely difficult to reverse that decline. Our predictive analytics indicate a few more dropped calls for HTC.
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