Deutsche Bank has raised its target price for FTSE 250 chip designer Imagination Tech (IMG) and reiterated its 'buy' recommendation for the stock, highlighting the earnings upside from a potential Samsung design win.

The broker said that over 2012 IMG's share price underperformed the European technology sector by 50%, partly because of the loss of a mobile graphics design win at Samsung's high-end Galaxy smartphone to competitive ARM Holdings.

Analyst Johannes Schaller said: "With IMG management commenting on re-gaining momentum at Samsung in FY14e (April-end) and Samsung not confirming ARM as the graphics provider at the launch of its latest high-end smartphone processor, we are now getting more confident in potential share re-gains for IMG here.

"In the case of IMG winning the new Galaxy S4 high-end smartphone, we would see 12% upside to our new FY14e EPS [earnings per share] forecast."

The broker has raised its EPS forecast for the year ending April 2014 by 7.0% and moved its target price for the shares from 520p to 600p.

Shares were up 0.38% at 524p by 10:56 on Wednesday.

BC

Related share prices
Imagination Technologies Group (IMG) share price