BofA Securities has downgraded ASUSTeK Computer Inc. (2357:TT) (OTC: AKCPF) from “Buy” to “Neutral,” citing concerns over rising costs and slowing server demand. The firm also lowered its price target from NT$715.00 to NT$660.00.
The downgrade, led by analyst Robert Cheng, reflects the impact of a 20% tariff hike imposed by the Trump administration. Higher costs in the U.S. could weaken demand if ASUSTeK passes the burden onto customers. Additionally, server growth is expected to decelerate in 2025, while the company’s valuation remains high compared to industry peers.
BofA Securities has revised its earnings estimates for ASUSTeK from 2025 to 2027, cutting projections by 5-6% to account for these challenges. The new price target is based on 16 times projected earnings per share (EPS) for the second quarter of 2025 through the first quarter of 2026, down from the previous 16.5 multiple.
Despite these concerns, ASUSTeK could still see momentum in its gaming segment. Nvidia’s (NASDAQ: NVDA) upcoming RTX 50 series GPUs, set to launch in the second quarter of 2025, may drive growth. The company is also expected to see a higher mix of server sales, accounting for a low teens percentage of its 2024 revenue—higher than its PC-focused peers. Additionally, ASUSTeK may benefit from a potential earnings boost in early 2025 due to the reversal of bad debt from an Indian client.
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