Shares of Foxconn Tech (TAI: 2354) are trading about 2% higher this week on a strong outlook for the new iPhone 12 for the holiday quarter.
Fundamental analysis: Strong demand for new iPhone 12
Foxconn reported a net profit of T$30.8 billion ($1.08 billion) in the quarter between July and September, compared to T$30.7 billion a year ago and beating the consensus estimates of T$28.61 billion.
The company’s plan to inject $10 billion into the state of Wisconsin did not result in enough job positions last year to earn tax credits, marking the second year Foxconn failed to meet targets set by President Donald Trump. Foxconn also emphasized its plan to continue investing in the U.S. and keep manufacturing new products.
Many consider Foxconn a symbol of unfulfilled promises, particularly in Midwestern states that played a critical role in Trump’s election 4 years ago. The electronics company said its investment strategy isn’t based on who the U.S. president was. Instead, Foxconn said it was considering creating a new production line.
“We continue to push forward in Wisconsin as planned, but the product has to be in line with the market demand … there could be a change in what product we make there,” said Chairman Liu Young-way.
Foxconn CEO David Huang said third-quarter revenue plummeted by 7% as clients were postponing product rollouts. The company, which supplies Apple, registered better than anticipated demand for both smartphones and servers as it witnessed strong deliveries for the new iPhone 12.
Liu and other analysts projected this trend to keep up over the next several months. The company will probably construct all premium models and 70% of other models, according to analysts.
Technical analysis: Foxconn attempting to break
Foxconn share price is trading about 2% higher this week after gaining 2.4% in the last week. The price action is still in the recovery mode after printing an 11-year low in March.
Foxconn stock price will now try to build a base and push higher, although there are multiple resistance lines lying overhead. The 100-DMA and 200-DMA are trading at 53.4 and 54.6, respectively, while the horizontal line (the red line) also offers resistance at 57.5.
Electronics company and Apple supplier Foxconn believes iPhone 12 will see strong demand over the next few months and said it plans to continue investing in the United States. Shares are now breaking out as buyers hope to create a more meaningful rally in the coming days and weeks.
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