With stock prices still sluggish, the gap remains wide even after Samsung Electronics and SK hynix target prices are cut

[Financial News] Even as the share prices of Samsung Electronics and SK hynix have remained volatile, brokerage firms that had kept their target prices unchanged are now lowering them one after another. However, as the stocks continue to trade sluggishly, the gap between market prices and target prices does not appear to be narrowing easily.
According to FnGuide on the 26th, the gap between the share prices and target prices of Samsung Electronics and SK hynix stood at 91.4% and 97.7%, respectively, as of the previous day. That means brokerage target prices are more than 90% higher than the actual stock prices.
At the end of May, the gap for Samsung Electronics was just 25.0%, while SK hynix stood at 5.9%. By the end of June, those figures had widened to 48.0% and 20.5%, respectively. But in the second half of the year, the gap expanded into triple digits, and brokerages rushed to cut their target prices. Samsung Electronics' average target price now stands at 491,875 won, down 4.3% from its peak a month ago. SK hynix's average target price is 3,317,917 won, down 8.7% over the same period.

As the share prices of Samsung Electronics and SK hynix have swung sharply, the gap has remained stuck in the 90% range. Since the start of the second half, Samsung Electronics has fallen 23.1%, while SK hynix has dropped 36.7% through the previous day.
Still, the brokerage community believes the share prices of Samsung Electronics and SK hynix have been pushed down too far. Earnings forecasts continue to trend upward. For this year, the annual operating profit consensus for Samsung Electronics and SK hynix has risen slightly from the previous month to 39.1786 trillion won and 26.66475 trillion won, respectively. Compared with three months ago, those estimates are up 11.4% and 4.2%.
Kim Young-gun, a researcher at Mirae Asset Securities, said, "Despite a solid industry backdrop, the stock price is being corrected excessively relative to fundamentals due to concerns over macroeconomic uncertainty." He added, "There are limited signs of weakness in both the industry and fundamentals, and the greater the uncertainty in capital market conditions, the more important it is to focus on outcomes with a high degree of certainty."
Analysts also say the stocks could be revalued, especially as Samsung Electronics and SK hynix have recently unveiled record-level shareholder return plans.
Kim Dong-won, Research Head at KB Securities, said, "If Samsung Electronics applies its existing shareholder return policy for another three years next year, the scale of shareholder returns is expected to expand more than fourfold compared with 2024 to 2026." He added, "This could mark a turning point in Samsung Electronics' revaluation, from a simple cyclical stock to a long-term compound investment asset."
On SK hynix, he said, "This early 40 trillion won shareholder return policy is seen as a sign of confidence in future cash generation and medium- to long-term growth, and it is expected to have a positive effect on future valuation re-rating." He also noted, "Memory supply shortages are expected to deepen further through 2028, and as the share of five-year long-term supply agreements (LTAs) expands, memory prices are likely to rise sharply."
[email protected] Seo Min-ji Reporter