Target Vs. Actual

The automobile and steel stocks showed much difference between target and actual stock prices while those of large-cap IT stocks did not so much.
The automobile and steel stocks showed much difference between target and actual stock prices while those of large-cap IT stocks did not so much.

 

Although disclosure systems to eradicate securities firms’ exaggeration in target stock prices are about to take effect, the companies are still sticking to unrealistic target stock prices and investment opinion at "buy." In particular, large-cap IT stocks, which continuously had growth this year such as Samsung Electronics and SK Hynix, showed not much difference between target and actual stock prices but automobile and steel stocks, whose prices were at a standstill or dropped, saw the gaps.

According to industry tracker FnGuide on June 17, the Hyundai Mobis share prices, which stood still this year, closed at 263,000 won (US$232) as of the 16th. However, securities companies made some changes only on share prices of its report on Hyundai Mobis in January. Park In-woo, an analyst at Mirae Asset Daewoo, said that Hyundai Mobis is highly likely to improve its performance in the first quarter and autonomous and eco-friendly vehicles have high potentials. He kept the investment opinion at "buy" but lowered the target price from 330,000 won (US$291) in January to 310,000 won (US$273) in April. Since then, Hyundai Mobis had shown the stock price hikes and moved downward again but the target stock prices haven’t changed. 

Korea Investment & Securities lowered the target stock prices of Hyundai Mobis from 380,000 won (US$335) to 340,000 won (US$300) for similar reasons, while Samsung Securities and NH Investment & Securities lowered them from 350,000 won (US$309) to 290,000 won (US$256) and from 340,000 won (US$300) to 290,000 won (US$256), respectively. As a result, four securities companies have a high price differential rate of 24.8 percent between 350,000 won (US$309), the six-month average target stock prices in January and the current stock prices. Though they lowered the average target stock prices to 300,000 won (US$265), the price differential rate reached 12.3 percent. 

The four companies’ average target stock prices of POSCO in January were 327,500 won (US$289), which showed 19.3 percent of the price differential rate with the current stock prices of 274,500 won (US$242). To be sure, analysts’ predictions cannot be always right as the stock prices of a company can be affected by variables including performance, supply and demand and investor sentiment. However, securities firms are receiving much criticism because they frequently adjust the target stock prices of rising stocks while they maintain the target stock prices and investment opinions of stocks which are at a standstill or declining despite growing gaps with actual stock prices. 

 

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