Samsung Electronics at 650,000 won vs. 360,000 won: Extreme forecasts hidden behind the record surge

[Financial News] Samsung Electronics and SK hynix staged a dramatic turnaround on the 31st of last month, soaring more than 20% in a single day. However, the gap between the average target price set by securities firms and their actual share prices remains as wide as twofold.
Even after major brokerages repeatedly lowered their expectations during the three-day selloff from July 28 to 30, the stock plunge was so severe that the gap between market prices and target prices still came close to 100%.
According to the Korea Exchange on the 2nd, Samsung Electronics closed at 262,500 won on the 31st of last month, up 26.81% from the previous trading day. Still, the average target price for Samsung Electronics set by brokerages over the past month stood at 514,545 won, putting the gap with the current share price at 96%.
SK hynix, which ended the session at 1,718,000 won after hitting the upper limit, was in the same position. Its gap from the one-month average target price of 3,371,538 won also reached 96%.
The widening gap was driven by the record-breaking selloff that hit the semiconductor giants over the previous three days. News of China’s push to localize semiconductor lithography equipment, the Shanghai Stock Exchange listing of memory maker ChangXin Memory Technologies (CXMT), and SK hynix’s second-quarter earnings that fell short of expectations all weighed on shares. The one-day surge that followed was not enough to close the distance to target prices.

During the three-day slump, brokerages rushed to cut their target prices. Mirae Asset Securities lowered its target for Samsung Electronics from 550,000 won to 370,000 won, and for SK hynix from 4.2 million won to 2.8 million won, each by 33%. Shinhan Investment Corp. also cut its targets for Samsung Electronics, from 590,000 won to 450,000 won, and SK hynix, from 4.2 million won to 2.7 million won. Samsung Securities, Daishin Securities, Hanwha Investment & Securities, and NH Investment & Securities also joined in.
BNK Investment & Securities lowered its target for SK hynix from 1.85 million won to 1.48 million won while maintaining a 'Hold' rating. Lee Min-hwi, a researcher at BNK Investment & Securities, said, "Even as demand momentum has passed its peak, companies are pushing ahead with aggressive capacity expansion, raising concerns that the market could swing into oversupply in the future."

On the other hand, some firms argued that market concerns were excessive and raised their target prices instead. Korea Investment & Securities was the only major brokerage last week to raise both targets. It lifted Samsung Electronics from 590,000 won to 650,000 won and SK hynix from 3.8 million won to 4.7 million won.
Chae Min-suk, a researcher at Korea Investment & Securities, said, "The market is reflecting doubt, but solid fundamentals are being proven through earnings." She added, "Now is the time to focus on the direction of corporate value and profits rather than short-term stock price swings." Eugene Investment & Securities also kept its highest rating of 'Strong Buy' on Samsung Electronics, citing expanded long-term agreements (LTA) and expectations for share buybacks as positive factors.
Meanwhile, SK hynix American Depositary Shares (ADSs), listed on NASDAQ, closed at $143.73, or about 207,600 won, on July 31 local time. Since one ADS represents one-tenth of a common share, the stock was trading at about 21% above the closing price of the domestic common shares, suggesting a relatively stronger valuation in overseas markets.
[email protected] Moon Young-jin Reporter