An increasing number of securities companies are lowering the target stock price of Samsung Electronics Co. as the company announced on Jan. 8 its earnings guidance for the fourth quarter of 2018, which fell far short of the market expectations.
The securities industry said that the semiconductor market slowed down starting from the end of last year. Analysts are now paying attention to the market conditions in the first quarter of this year. Many analysts say the company's stock price will fluctuate within a range for a while, rather than suffer an additional steep fall.
Market data provider FnGuide said on Jan. 9 that eight securities companies, which released a report on Samsung Electronics on the same day, such as Korea Investment & Securities Co., KTB Investment & Securities Co. and Kiwoom Securities Co., all lowered the company’s target stock price. Yoo Jong-woo, an analyst from Korea Investment & Securities, estimated Samsung Electronics’ operating profit for this year at 36 trillion won (US$32.17 billion), down 39 percent from the earnings estimate for 2018. The figure is 22 percent lower than 46 trillion won (US$41.11 billion) of the previous estimate. Based on this, he lowered the company’s target stock price from 49,000 won (US$44) to 46,000 won (US$41).
Kim Yang-jae, an analyst from KTB Investment & Securities, also decreased Samsung Electronics’ target stock price from 54,000 won (US$48) to 48,000 won (US$43) according to the lower earnings projections. In regard to the company’s results for the fourth quarter, he said, “The result reflected the slowdown of the semiconductor market from December last year. It is necessary to check the final earnings by sector to be announced at Samsung Electronics’ investor relations (IR) meeting scheduled at the end of this month in order to see whether worsening business showings is a temporary trend.
Some market experts say that Samsung Electronics will show a rebound in performance from the second quarter. Lee Seung-woo, an analyst from Eugene Investment & Securities, said, “The company’s performance in the semiconductor sector will stabilize as the bit shipments greatly increases in the second quarter. It is also expected to experience a performance rebound with the launch of the Galaxy S10 and better performance in the organic light-emitting diode (OLED) sector."