On Wednesday, Bernstein SocGen Group adjusted its outlook on Samsung Electronics Co Ltd (KS:005930:KS) (OTC: SSNLF (OTC:SSNLF)), reducing the stock's price target from KRW104.00 to KRW82.00.
Despite this change, the firm continues to recommend Samsung as an Outperform.
InvestingPro data shows Samsung maintains robust financials with a current ratio of 2.52 and minimal debt-to-equity of 0.05, while consistently paying dividends for 32 consecutive years. According to InvestingPro, Samsung's net income is expected to grow this year, with revenue forecast to increase by 17% in FY2024.
The decision came after Samsung's recent guidance, which indicated the company's potential expansion due to its expected qualification by NVIDIA (NASDAQ:NVDA) in the first half of 2025. This qualification is seen as a key factor in improving Samsung's position in the high bandwidth memory (HBM) market.
Analysts from Bernstein SocGen Group found Samsung's guidance to be credible and anticipates a gradual transition to newer HBM technologies, contrary to some market expectations that Samsung might lag behind in adopting HBM3E 12hi and HBM4.
According to the analyst, while certain contracts may slow down Samsung's market share gains, the anticipated multiple expansion is likely to bolster the stock's performance in the calendar year 2025. The revised price target of KRW82,000 is based on 1.5 times the tangible book value projected for the third quarter of 2025. This is a decrease from the previous valuation of 1.8 times the second quarter of 2025's tangible book value.
The adjustment reflects a more conservative valuation due to Samsung's less-than-expected progress over the past three months. Additionally, there is a growing skepticism among investors regarding the company's growth momentum going into 2026, which has led to their reluctance to assign a higher valuation to the stock. Despite these concerns, Bernstein SocGen Group maintains a positive outlook on Samsung's performance in the upcoming year.
In other recent news, Samsung Electronics Co (F:SAMEq) Ltd has been making significant moves in the market. Citi and JPMorgan (NYSE:JPM) have both reaffirmed their positive stance on the company, with Citi maintaining its Buy rating and JPMorgan keeping its Overweight rating.
Citi projects a recovery in Dynamic Random-Access Memory (DRAM) prices by the second quarter of 2025, which is anticipated to positively impact Samsung's share price. JPMorgan, meanwhile, has slightly reduced its price target for Samsung but remains optimistic due to the company's improving high bandwidth memory performance and strategic initiatives.
Recent developments for Samsung include a 7% sequential increase in Q3 2024 revenue, reaching KRW 79.1 trillion, primarily due to a 13% rise in revenue from its Mobile eXperience (MX) division. However, operating profit fell to KRW 9.2 trillion due to one-off costs and currency fluctuations. Despite these challenges, Samsung forecasts a positive market demand trend for 2025, focusing on high-value products and advanced technologies, particularly in semiconductors and displays.
The company has declared a dividend of KRW 361 per share, totaling KRW 9.8 trillion for the year. In a bid to boost its competitiveness, Samsung is investing in next-gen semiconductor R&D and advanced process node conversion. Additionally, the company plans to enhance its foldable devices with AI features, reflecting its strategic positioning to navigate market challenges and enhance its product offerings.
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