Out of the Gate: LG Display slumps after downgrade
Friday May 16, 10:25 am ET
LG Display shares slump after Credit Suisse downgrades on stock price, new LCD production line
NEW YORK (AP) -- Shares of LG Display Co. fell sharply in morning trading Friday after Credit Suisse analysts cut their rating on the world's No. 2 maker of liquid crystal displays, citing a recent price rally and supply concerns.
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John Sung and Sang Hoon Kim cut LG Display to "Neutral" from "Outperform" in a note to investors Friday. The stock lost $1.69, or 7.1 percent, to $22.01.
The analysts said they are concerned about the stock's recent price rally, noting that it now outperforms its regional peers. Shares have jumped more than 18 percent since trading at a year-to-date low of 19.98 Feb. 5.
Furthermore, they said the company's plans to build a massive new liquid display production line could lead to a supply glut for the sector, as its competitors seek to preemptively defend or expand their market share.
"As we know, it often takes just one player to change the overall industry dynamics in a deeply cyclical commodity," Sung said.
On Friday, the South Korean company said it plans to spend 1 trillion Korean won, or $960 million, for a sixth-generation production line that will likely begin operations in the second quarter of 2009.
Shares of LG Display have lost nearly a quarter of their value from a 52-week high of $31.29 in November.
