[Click e-Stock] "Sluggish Earnings Recovery" Korea Investment & Securities Lowers CJ ENM Target Price

Korea Investment & Securities has revised its target price for CJ ENM downward from 93,000 won to 75,000 won, citing that the company's earnings recovery is progressing more slowly than expected.

According to Korea Investment & Securities on April 21, CJ ENM's revenue for the first quarter is estimated at 1.25 trillion won, with operating profit expected to reach 27.8 billion won. Kim Jeongchan, an analyst at Korea Investment & Securities, stated, "The results are likely to be in line with the consensus," but also explained, "Excluding the commerce segment, there will be year-on-year improvement, but the results are somewhat disappointing compared to the previous quarter."

By business segment, improvements are anticipated in the media platform, film/drama, and music divisions, while the commerce segment is expected to remain sluggish. Analyst Kim commented, "The operating profit for the commerce segment is forecast at 23.1 billion won, which means it will continue to serve as a stable cash cow. However, due to weakened consumer sentiment stemming from economic uncertainty since March, it is expected to see negative growth of 10% year-on-year."

Accordingly, Korea Investment & Securities has revised its earnings estimates downward and lowered its target price by 19%. The revenue and operating profit forecasts for 2026 were revised from 5.57 trillion won and 222 billion won, respectively, to 5.322 trillion won and 196 billion won. The operating margin forecast was also lowered from 4.0% to 3.7%. However, the firm maintained its "Buy" rating, noting that while first-quarter results are likely to mark the bottom, the direction for quarterly earnings improvement remains intact.

Analyst Kim added, "Quarterly earnings recovery is slower than expected due to challenging industry conditions," but also noted, "Considering factors such as an increase in Tving subscribers following the KBO opening in the second quarter, expectations for Studio Dragon's performance to improve after a weak start, strong initial sales of RD1, and the gradual recovery of MLC, we remain confident in the potential for earnings improvement in 2026."

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