[Click eStock] "Kakao, Earnings Turnaround Expected This Year... Target Price Up"

Target Price Raised from 49,000 KRW to 53,000 KRW

NH Investment & Securities raised the target price for Kakao from 49,000 KRW to 53,000 KRW on the 14th, expecting a turnaround in this year's performance. The investment rating was maintained at 'Buy.'

Ahn Jae-min, a researcher at NH Investment & Securities, stated, "We adjusted the target price upward reflecting the change in the base year for 2025 earnings estimates and the recent stock price increase of the listed subsidiaries. Kakao is expected to see various changes such as increased traffic and the introduction of a subscription model through its partnership with OpenAI alongside the KakaoTalk revamp, as well as AI applications within its services. Additionally, the performance improvement effects of its subsidiaries are expected to fully materialize, enabling an operating profit turnaround in 2025."

NH Investment & Securities forecasts Kakao's operating profit this year to increase by 30.8% year-on-year to 602.1 billion KRW. Researcher Ahn said, "The subsidiaries' performance improvements are expected to include KakaoPay's return to profitability, SM Entertainment's earnings growth, the consolidation of DearU, and the recovery of Kakao Entertainment's performance."

They analyzed that the partnership with OpenAI has generated AI momentum. Kakao announced a strategic partnership with OpenAI last month. Researcher Ahn said, "Services incorporating the revamped tabs and AI business models are expected to be unveiled as early as the first half of the year. We anticipate various services such as the introduction of ChatGPT within KakaoTalk, revamped Shop search, subscription model adoption, and AI-based shopping recommendations. This is expected to resolve the long-standing issue of the lack of AI-related momentum surrounding Kakao all at once."

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