"Samsung and SK hynix are still cheap"... Bold forecasts of '260,000 won Samsung, 1.5 million won SK hynix' from securities firms

[The Financial News] As Samsung Electronics and SK hynix prepare to announce their fourth-quarter results for last year, securities firms have been raising their target prices one after another.
According to the securities industry on the 29th, SK Securities raised its target price for Samsung Electronics by 53% from the previous level to 260,000 won, and lifted its target for SK hynix by 50% to 1.5 million won.
Both companies cited the memory semiconductor cycle as the key factor behind earnings improvement. Han Dong-hee, an analyst at SK Securities, said, "We are entering a phase where overall memory demand is increasing, while supply capacity is structurally constrained," adding, "Reflecting a much stronger memory market than previously expected, we are revising up this year's price increase assumptions for DRAM and NAND to 111% and 87%, respectively."
KB Securities also recently raised its target prices for Samsung Electronics and SK hynix to 240,000 won and 1.2 million won, respectively, reflecting strong demand for AI and other factors.
Samsung Securities likewise increased its target price for Samsung Electronics to 200,000 won and for SK hynix to 950,000 won.
The sharp rise in the share prices of Samsung Electronics and SK hynix is also accelerating the upward revisions of target prices by securities firms.
On the 29th, with both companies set to release their fourth-quarter results for last year, Samsung Electronics broke through 160,000 won intraday the previous day, hitting a new all-time high once again. SK hynix also surpassed 850,000 won for the first time ever during trading.
This year's earnings outlook is also rising rapidly. According to FnGuide, the consensus estimate for Samsung Electronics' annual operating profit this year stands at 122.8787 trillion won, up 44% from a month ago. The operating profit forecast for SK hynix has also climbed 31% over the past month to 99.4286 trillion won.
Some analysts say earnings forecasts could be revised up further, given the recent strength in the memory market.
Han Dong-hee of SK Securities noted, "Upward revisions to this year's earnings outlook are still ongoing, and long-term supply contracts will enhance visibility for future results," and added, "Despite the steep share price rally, there is still ample upside potential."
However, some in the securities industry argue that the assumptions behind the numbers are more important than the figures themselves.
Kim Dong-won, head of research at KB Securities, explained, "As AI grows, more memory and storage capacity is needed, and in the end, companies with large production capacity that can supply stably will have the advantage," adding, "Samsung Electronics is the world's No. 1 in NAND production capacity, so it is expected to benefit as Nvidia's demand for the Inference Context Memory Storage (ICMS) platform expands."
He went on to say about SK hynix, "As inference AI spreads faster than expected and the range of AI applications broadens, demand for DRAM and NAND could increase further."

moon@fnnews.com Moon Young-jin Reporter