“It’s at 170,000 Won, but You Say It’ll Hit 300,000—Should I Buy?”...Brokerage Target Prices Mostly “Double the Stock Price” [Shareholder Club]

[Financial News] Naver reported third-quarter results that fell short of market expectations due to rising costs. While lowering earnings forecasts to reflect a slowdown in its core business, brokerages maintained target prices in the 300,000-won range, saying results would rebound starting next year, when its first AI data center contract is reflected.
According to the securities industry on the 13th, IBK Investment & Securities maintained its target price for Naver at 320,000 won, while DB Securities kept its target at 300,000 won. KB Securities cut its target by 6%, from 330,000 won to 310,000 won. All three brokerages maintained their “Buy” ratings.
KB Securities lowered its target price because of slower growth in the core platform business and falling share prices of global neocloud companies, which led it to reduce the valuation multiple applied to the enterprise segment. IBK Investment & Securities kept its target price but cut its estimate for next year’s earnings per share (EPS) by more than 20%, from 13,677 won to 10,879 won.
Shin Eun-jeong, an analyst at DB Securities, said, “The stock has been weak due to uncertainty over the AI Factory’s contribution to earnings, slower growth in the core business, and concerns about investment in logistics centers,” adding, “A considerable part of those concerns has already been reflected in the share price.”

Naver’s third-quarter revenue rose 10.7% year on year to 3.4724 trillion won, but operating profit fell 20.9% to 451.3 billion won, 8.5% below the consensus estimate of 493 billion won. Its operating margin fell to 13.0%, down more than 5 percentage points from 18.2% a year earlier.
Costs weighed on results. Marketing expenses rose 32.3% as shopping and payment promotions expanded; infrastructure costs increased 29.1% as computing assets were expanded; and partner costs rose 18.8% with the rollout of Naver Pay offline payment terminals.
Growth in the core business also slowed. Advertising revenue rose just 5.5% as the early Chuseok holiday reduced the number of business days. Jieun Lee, an analyst at KB Securities, said, “The burden of a higher base, following last year’s launch of the shopping app and the impact of higher commerce fees, is beginning to fully set in,” and forecast, “With the cost burden of new businesses compounded by the slowdown in the core business, it will be difficult for the platform business to recover profitability for the time being.”

The AI data center (AI Factory) business is seen as a growth driver. Naver signed its first supply contract with a North American AI company for a capacity of 20 megawatts (MW), worth about 2 trillion won over four to five years. The market reaction at the time was cool, and the share price fell after the contract was announced.
Lee attributed this to “concerns that the contract was smaller than the market expected and that its unit price was lower than competitors’,” then assessed, “Annual revenue per MW is estimated at about 28.9 billion won, which is not excessively low compared with competitors. Double-digit margins are also possible once utilization normalizes.”
Expectations for additional contracts remain. Naver is sticking to its goal of building 200 MW by 2028 and is in talks with around 10 customers about the remaining 180 MW. DB Securities estimated that if revenue starts to be recognized from the second quarter of next year and 100 MW is operational by year-end, AI Factory revenue next year could reach about 800 billion won.
Lee Seung-hoon, an analyst at IBK Investment & Securities, said, “AI Factory’s shift to profitability will become visible from the start of full-scale commercialization next year, and profitability of double digits or more is expected from 2028,” adding, “The cost burden is also passing its peak.” Brokerages forecast that operating profit will fall by 9% to 11% this year to around 2 trillion won, then rebound to between 2.188 trillion and 2.374 trillion won next year.
[email protected] Kim Hee-sun Reporter