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Morgan Stanley Downgrades Largan and GSEO, Citing Overheated Valuations
Electronic Technology · Electronic Components · economic_daily · 2026-09-11
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Morgan Stanley has downgraded Largan Precision and GSEO to 'Neutral,' warning that recent rallies have pushed valuations beyond fundamentals despite higher price targets.
What Happened
Rating Downgrade: Morgan Stanley has downgraded its rating for optical lens manufacturers Largan Precision and GSEO from 'Overweight' to 'Neutral.' The firm noted that while the companies have benefited from market enthusiasm surrounding CPO technology, their recent stock rallies have caused valuations to decouple from fundamental realities.
Largan Outlook: Largan is experiencing a seasonal recovery in Q3 driven by the launch of the new iPhone 18 series, with August revenue reaching a four-month high. However, analysts argue that the current share price already reflects optimistic expectations for FAU market share, which is not expected to reach mass production until 2027 or 2028.
GSEO Performance: GSEO is expected to see improved profitability due to the integration of variable aperture cameras in the iPhone 18 Pro models, leading Morgan Stanley to raise its price target to NT$910. Despite this increase, the stock's recent market performance has pushed it well above the new target, signaling that the market may have priced in future growth too aggressively.
Market Sentiment: Both companies have significantly outperformed the broader Taiwan Stock Exchange index over the past month. Morgan Stanley’s move serves as a cautionary note for investors, suggesting that the current stock prices have already factored in future catalysts, leaving little room for further short-term upside.