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Fingerprint cards value is anyone's guess as analysts differ

[STOCKHOLM] Two new brokerages started covering Fingerprint Cards AB this month, taking the number of analysts with a reported recommendation on Europe's best performing stock last year to a grand total of three.

While each of the three banks have a different rating on the stock - one sell, one buy and one hold - their target prices paint an even more divergent picture of Fingerprint's prospects. Arctic Securities recommends clients buy the stock with a target price of 850 kronor, while Carnegie rates the shares hold with a target of 500 kronor. ABG Sundal Collier advises customers to sell with a probability-weighted average price target of 200 kronor. The shares rose 4.5 per cent to 475.6 kronor as of 9:48 am in Stockholm.

That brings the ratio of lowest to highest analysts' price estimates to 4.25 for Fingerprint, compared with an average of 1.77 for the Swedish companies on the benchmark OMX Stockholm 30 Index. The company with the second-highest range, SSAB, has a ratio of 2.83. The specialty steel maker saw its shares drop to their lowest level in more than 14 years last month as prices declined in the wake of China's economic slowdown.

Gothenburg-based Fingerprint Cards has benefited as makers of mobile phones increasingly adopt its technology enabling users to access smartphones and devices with the tap of a finger. The Swedish maker of biometric sensor technology soared more than 1,500 per cent last year, but has declined 20 per cent in 2016.

It's not a question of if, but when Fingerprint's hegemony in China will be "decimated," ABG Sundal Collier analyst Per Lindberg wrote to clients in a note dated Jan. 22. According to Lindberg, there are several reasons to anticipate a much harsher competitive environment over the next 12 to 15 months, with Synaptics Inc. and Qualcomm Inc. among rivals jockeying for market share.

"With standardization comes commoditization and commoditization makes suppliers exchangeable and replaceable," he said. "That almost all of its sales and cash flow emanate from China heightens risks associated with investments in the share."