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Apple supplier AMS shares surge on strong start to 2017

Reuters - UK Focus

By Anna Serafin

April 25 (Reuters) - AMS (IOB: 0QWC.IL - news) shares jumped as much as 20 percent a day after the Austrian chip maker reported first-quarter revenue above its own expectations, and said it might increase its mid-term revenue growth target on strong customer demand.

AMS supplies smartphone makers like Apple (NasdaqGS: AAPL - news) and Samsung with optical sensors that help adjust the brightness and colours on screens.

Excitement around the iPhone 8 has boosted some Apple (Swiss: AAPL-EUR.SW - news) suppliers' stocks so far this year. AMS has been one of the biggest beneficiaries with its shares more than doubling.

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ZKB analyst Andreas Müller said AMS was also poised to benefit in the current quarter from the launch of the Samsung Galaxy S8.

AMS said on Monday it expected revenues of 174 million to 181 million euros ($197.13 million) for the second quarter, a big jump from 149.3 mln euros it reported in the first quarter.

"AMS reported an impressive start to the year ... the outlook demonstrates that demand is strong for its portfolio of sensing solutions, even more so than that previously forecast," Barclays (LSE: BARC.L - news) analyst Andrew Gardiner wrote in a note to clients.

The company has also increased its capital expenditure forecast to ramp up capacities at its facilities, citing significantly increased customer forecasts and a higher revenue pipeline for 2017.

Müller said he believed these capacity expansions were not just linked to the iPhones, but also to some new Chinese customers.

AMS is now "more confident" that all projects are ramping, the company said in a conference call, but it declined to comment on customer specific project pipelines.

Apple's suppliers are also in the spotlight after Imagination Technologies (Other OTC: IGNMF - news) revealed earlier this month that Apple plans to replace its graphics chips with parts it is developing in-house. Shares (Berlin: DI6.BE - news) in another supplier Dialog Semiconductor were hit when an analyst report suggested it could lose a big Apple supply deal.

AMS shares were last up 15 percent at 61.90 Swiss francs and topped the pan-European Stoxx 600 index. ($1 = 0.9182 euros) (Writing by Thyagaraju Adinarayan. Editing by Jane Merriman)