JPMorgan: Largan Precision — Continued Lens Upgrades Across iPhone Cycles; Long-Term CPO Opportunity; Reit Overweight
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JPMorgan maintains an Overweight rating on Largan Precision (3008.TW) with a December 2026 target price of NT$3,200, increased from NT$3,150, based on 17 times 2027 estimated earnings—consistent with the ten-year average.
Largan reported 4Q25 earnings per share of NT$50.4, down 25% year-over-year and 6% quarter-over-quarter. The gross margin of 47.8% fell below both JPMorgan's 49.1% estimate and Bloomberg consensus of 51.5%, impacted by routine inventory write-offs and lower production efficiency for certain low-volume models. Operating income missed Bloomberg consensus by 7% despite controlled operating expenses.
For 1Q26, management guided sequential revenue declines in January and February due to seasonality and the Lunar New Year. JPMorgan forecasts 1Q26 revenue of NT$14.7 billion, representing a 14% quarterly decline but slight year-over-year growth, supported by better-than-seasonal iPhone 17 demand. The 1Q26 gross margin estimate was trimmed to 50.0% on lower capacity utilization.
JPMorgan anticipates the launch of a foldable iPhone and the 18 Pro lineup in 2H26, while the standard 18 and 18 Air are delayed to 1H27. Total iPhone assembly volumes may decline in 2026, but Largan's revenue should still grow, driven by variable aperture upgrades in Pro models. Management highlighted co-packaged optics research as a potential long-term diversification driver. 2027 estimates were raised 2%, reflecting an expanded lineup including a second-generation foldable and upgraded Pro models supporting continued ASP improvements.