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4 months ago
Falling Price Targets… Only False Hope Remains for Semiconductors (Sep 23, 2024)
Concerns over a deteriorating semiconductor outlook continue to grow, weighing heavily on Samsung Electronics and SK Hynix. Once flooded with bullish forecasts, securities firms are now rapidly slashing their price targets.On September 19, Samsung Electronics hit a new 52-week low of ₩62,200, while SK Hynix briefly fell to the ₩150,000 range, returning to levels seen at the beginning of the year.According to FnGuide on September 23, the average price targets for Samsung Electronics and SK Hynix, as of September 22, stood at:Samsung Electronics: ₩101,958SK Hynix: ₩262,280This represents a 7.97% drop for Samsung Electronics from ₩110,783 on August 22, and a 4.51% decline for SK Hynix from ₩274,667 over the past month.Ironically, securities firms were raising price targets for both companies as recently as July and August, even as AI investment concerns started to weigh on semiconductor stocks. Now, they have reversed their forecasts.Securities Firms’ Shifting Price TargetsAn analysis of this year’s price target trends shows that July and August saw the highest projections, only for them to be cut sharply in September:Samsung Electronics’ average price target (by month):January: ₩94,621April: ₩104,647June: ₩109,071July: ₩110,692August: ₩113,462 → 80% above the current price (₩62,600)September: ₩97,750 (14% decline from August)Some firms have lowered targets below their January estimates:BNK Securities: ₩86,000 → ₩81,000NH Investment & Securities: ₩95,000 → ₩92,000Korea Investment & Securities: ₩99,000 → ₩96,000SK Hynix’s price target trend:January: ₩169,000July: ₩277,655 (+64% from January)September: ₩253,750 (-8% from July)Global Analysts Turn Bearish on SemiconductorsThe bearish sentiment isn’t limited to South Korea. Morgan Stanley, which recently slashed its price targets for Samsung and SK Hynix, also downgraded ASML, a key semiconductor equipment supplier, from "Overweight" to "Neutral".According to FnGuide, analysts from at least three institutions have cut their estimates for Samsung Electronics' Q3 earnings:Operating profit estimate: ₩11.70 trillion (14.3% lower than a month ago)Revenue estimate: ₩81.89 trillion (down 2.6%)SK Hynix’s Q3 forecasts have also been trimmed:Revenue: ₩18.20 trillion (-0.9%)Operating profit: ₩6.94 trillion (-2.0%)Contradictions in Securities Firms’ RatingsDespite the sharp price target cuts, no securities firm has downgraded its investment rating on either Samsung or SK Hynix. In fact, some analysts have even raised their ratings:Kiwoom Securities upgraded SK Hynix from "Market Perform" to "Buy" in August.Yuanta Securities’ Baek Gil-hyun, who cut his Samsung Electronics price target from ₩110,000 to ₩90,000 and SK Hynix from ₩270,000 to ₩220,000, still maintains a "Buy" recommendation.He argues that the semiconductor industry remains a "sector to overweight," predicting a rebound in 2025 as inventory adjustments end and AI-driven IT demand returns.However, most analysts agree that semiconductor stocks will remain volatile in the near term.Q4 Guidance Will Be a Key Market CatalystKB Securities’ Lee Eun-taek emphasized that upcoming earnings releases from Micron and Samsung Electronics will be crucial.“Unless we see a major upside surprise, volatility will persist.”“The most important factor will be guidance for mid-Q4.Depending on the outlook, the market may either fully price in negative factors or immediately rebound.”[Compliance Note]All posts by Sellsmart are for informational purposes only. Final investment decisions should be made with careful judgment and at the investor’s own risk.The content of this post may be inaccurate, and any profits or losses resulting from trades are solely the responsibility of the investor.Core16 may hold positions in the stocks mentioned in this post and may buy or sell them at any time.
