2014-03-04 06:15:18 - According to Laureate BVI, GT Advanced is rated a long-term buy with a target price of US$20.00 because it’s partnership through Apple (AAPL) has positioned it for massive growth.
Laureate BVI issued a long-term buy rating on GT Advanced Technologies (GTAT) due to its partnership with Apple (AAPL) and it’s diversified crystal growth equipment and solutions for the global solar, light emitting diode and electronics industries.
“We expect sapphire glass by GT Advanced, which is currently used by Apple (AAPL) to protect the camera lenses and the finger print sensor on the iPhone 5s, will also be used on the iPhone 6 and the iWatch. Sapphire glass is still expensive compared to Gorilla glass but the additional cost will be absorbed by the iWatch product line which will have less competition and higher profit margins,” according to Laureate BVI CEO Peter Tasca.
Tasca further states, "GT Advanced (GTAT) has already
received the first payment from Apple (AAPL) which is part of a multi-year deal for sapphire glass worth US$578 million.”
Laureate’s product research notes, that although sapphire glass is 3x’s more expensive than Gorilla Glass, sapphire glass scores 9 on the Mohs scale making it nearly as strong as a diamond and much stronger than Gorilla Glass which scored a 7 on the Mohs scale.
Tom Gutierrez, President and CEO of GT Advanced said, “We are pleased to have Apple as a sapphire customer and to be in a position to leverage our proprietary know-how to enable the supply of this versatile material.” He further stated, that his company expects to return to profitability in the second half of 2014, given the size of Apple’s contract.
Apple Chief Tim Cook also confirmed that the new GT Advanced facility in Mesa, AZ would be used to build sapphire crystal glass.
Tasca states, “The only long-term risk we see with sapphire glass is the cost. Smartphones are moving away from the high-end market and toward the mid level consumer. Worldwide smartphone trends are heading towards lower cost and more functionality. ”
According to Gartner Group, worldwide sales of smartphone units were 968 million, and tablets totaled 195 million units in 2013.
Laureate reports, in 2013 Sapphire represented only 16% of the company’s total revenue. With this new partnership GT Advanced will easily double Sapphire revenue. We see strong sales for GTAT for the next 3-5 years and we set a long-term target price of US$20.00 for this stock.
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