The Target Price Downgrade Humiliation of the Beloved Blue-Chip Stock by Ants... Samsung Electronics at the Bottom, Naver Not Yet

[Asia Economy Reporter Lee Seon-ae] Samsung Electronics and Naver (NAVER), which are always present in the top net-buy list of domestic individual investors. The common point of these two stocks, besides being the objects of individual investors' "unrequited love," is that they are currently sharing the humiliating fate of having their target prices repeatedly downgraded in the securities industry. Recently, as the stock market plunged sharply, both stocks faltered. Samsung Electronics dropped to the 50,000 KRW level, and Naver's price was halved compared to its peak. The securities industry has consecutively lowered their target prices. However, opinions on their current valuations are divided.

According to the Korea Exchange on the 16th, Naver closed at 231,000 KRW, down 1.07% from the previous day. Compared to the peak of 465,000 KRW set a year ago, it has been halved. Moreover, since the securities industry has lowered its target price, caution is required. Samsung Securities lowered the target price from 420,000 KRW to 330,000 KRW, SK Securities from 480,000 KRW to 350,000 KRW, and Ebest Investment & Securities from 410,000 KRW to 350,000 KRW.

Samsung Securities researcher Oh Dong-hwan emphasized, "Due to the economic slowdown, growth in major business units such as search platforms, commerce, and content is slowing, and costs are increasing, so operating profit in the second quarter is expected to struggle to grow compared to the same period last year," stressing the need to reflect adjustments in profit expectations.

SK Securities researcher Choi Kwan-soon also lowered the target price based on recently lowered forecasts. Seong Jong-hwa, a researcher at Ebest Investment & Securities, explained, "Based on the downward revision of the second-quarter earnings forecast, the annual earnings forecast for this year was also slightly lowered," adding, "The increase in personnel in the second quarter exceeded expectations, which raised the overall labor cost forecast." He further added, "Following the operating profit margin deterioration of 3.5 percentage points to 19.4% last year compared to the previous year, it is estimated to decline by 3.0 percentage points this year due to special salary increases (10%), aggressive hiring through the first half, and continued marketing."

However, Naver's stock price is not yet at the bottom. Despite the significant adjustment, unless there is strong positive news such as profit improvement or new business promotion, some further correction may occur. Researcher Oh said, "The current valuation is not yet at the bottom compared to the average of the past 10 years," and explained, "For a full-fledged stock price rebound, improvement in the economy in the second half and clear direction for new growth businesses are necessary."

Researcher Seong noted, "Even considering adjustments in earnings forecasts and valuation of major platform businesses, Naver's short-term decline is an exceptional level beyond that," but added, "Naver is a representative growth stock, and its bottom is difficult to predict due to strong influence from the macroeconomic environment." However, he expected profitability improvement from the third quarter, making a stock price rebound possible.

On the other hand, most securities firms agreed that Samsung Electronics is currently at a bottom level (in the 50,000 KRW range). Although concerns about earnings slowdown exist, these have already been sufficiently reflected in the stock price through adjustments. Fortunately, the stock price closed at 60,000 KRW, escaping the 50,000 KRW level the day before. If the price returns to the 50,000 KRW range, it is considered a bottom level by the securities industry.

Hi Investment & Securities researcher Song Myung-seop lowered Samsung Electronics' target price from 82,000 KRW to 75,000 KRW and recommended buying in divided purchases, stating, "The recently recorded price-to-book ratio (PBR) of 1.13 times is close to the average lowest multiple of 1.1 times during past sharp price drops."

Samsung Securities and Cape Investment & Securities also lowered Samsung Electronics' target price from 100,000 KRW to 90,000 KRW, while maintaining a buy rating. They said it is a time to accumulate from the perspective of divided purchases.

IBK Investment & Securities researcher Kim Un-ho said, "The recent decline in Samsung Electronics' stock price (in the 50,000 KRW range) fully reflects concerns about the DRAM market," and predicted, "DRAM prices are likely to enter a stabilization phase after adjustment in the third quarter, and the weak mobile segment will bottom out in the second quarter and exceed the first half in the second half." He maintained Samsung Electronics' target price at 88,000 KRW, judging that operating profit this year will exceed 50 trillion KRW, indicating high potential for stock price increase.

Shinhan Financial Investment stated that Samsung Electronics has already undergone significant downward revisions in earnings forecasts and pre-adjustments in stock price, recommending a buy rating with a target price of 78,000 KRW. Lee Seung-woo, a researcher at Eugene Investment & Securities, lowered Samsung Electronics' operating profit estimate for this year by 5% to 55.1 trillion KRW but raised the estimate for next year by 2% to 41.5 trillion KRW. He said, "Although next year's profit is expected to decrease by 25% compared to this year, the stock price has fallen by up to 38% from the peak based on closing prices," maintaining a buy rating and a target price of 79,000 KRW.

This content was produced with the assistance of AI translation services.