POSCO Holdings Shares Fall 4% After Price Target Cut as Delayed Lithium and Steel Recovery Weighs [Stock NOW]

[Financial News] POSCO Holdings Inc. is trading lower early in the session. Its shares closed up 4.20% the previous day after third-quarter results showed improvement, but investor sentiment appears to have weakened again as analysts adjust their expectations for the pace of recovery in its steel and lithium businesses, including by lowering their price targets. According to the Korea Exchange, as of 9:23 a.m. on the 3rd, POSCO Holdings Inc. was trading at 271,500 won, down 11,500 won (4.06%) from the previous trading day. It had closed at 285,000 won the previous day, up 4.20%, but gave back a substantial portion of those gains in a single day.
In a report released that day, NH Investment & Securities cut its target price for POSCO Holdings Inc. by 8.9%, from 450,000 won to 410,000 won.
It maintained its Buy rating. Choi Young-gwang, an analyst at NH Investment & Securities, said the firm had lowered its earnings estimates to reflect falling lithium prices as some mines resumed operations and a slower-than-expected rise in steel prices.
The reduction in its earnings outlook was also substantial. NH Investment & Securities lowered its estimate of POSCO Holdings Inc.’s operating profit for next year by 10.5%, from 4.235 trillion won to 3.791 trillion won. It also factored in the decline in the value of investment assets resulting from falling share prices of listed subsidiaries as a reason for cutting its target price.
Analyst Choi, however, judged that the potential for medium- to long-term improvement in the steel and lithium businesses remained intact. He explained, “The direction of an earnings recovery in the steel business, driven by rising prices for steel products focused on the domestic market amid protectionism, remains valid.”
He further projected, “The expansion of the lithium business and gradual improvement in profitability are expected to bring changes to the business portfolio, accompanied by an expansion in valuation.”
Third-quarter results beat market expectations. POSCO Holdings Inc.’s consolidated operating profit rose 47.9% year on year and 15.4% quarter on quarter to 945 billion won.
In particular, operating profit in the steel segment increased 40.4% from the previous quarter to 566 billion won, driving the improvement in results. This was the result of both higher sales volumes and price increases for its products.
The fourth quarter is expected to be the challenge. NH Investment & Securities estimated fourth-quarter operating profit at 511.3 billion won, down 45.9% from the previous quarter and below the market consensus of 757.2 billion won.
It expects steel sales volumes to fall because of a major overhaul of a blast furnace in Gwangyang, while profitability pressures in the secondary-battery materials segment are also expected to continue amid weak lithium prices.
Market views on lithium prices are also divided. At its earnings briefing the previous day, POSCO Holdings Inc. said the restart of Chinese mines and an increase in supply had contributed to the price decline, but added that prices were now near a bottom and that it expected a gradual recovery. NH Investment & Securities, by contrast, factored the price declines resulting from the resumption of operations at some mines into its earnings outlook.
For POSCO Holdings Inc.’s share price to rebound, a recovery in profitability in its lithium business will likely need to become evident. The direction of earnings improvement remains intact, but the gap between the pace of recovery expected by the market and actual business performance is expected to weigh on the share price for the time being.

[email protected] Kang Jung-mo Reporter