Shares of Japanese semiconductor maker Kioxia have halved over the past month, yet local brokerages are maintaining an optimistic outlook, citing artificial intelligence (AI) demand.
Target Prices 130% Above Closing Price
According to Bloomberg on the 21st, Japanese analysts are maintaining a positive outlook on Kioxia based on expectations for AI demand and improvement in the NAND flash market. Their average target price for Kioxia is about 130% higher than the closing price on the previous trading day.
Kioxia closed at 52,110 yen (about 474,508 won) on the Tokyo Stock Exchange on the 17th, less than half of the all-time high recorded a month earlier. The market was closed on the 20th for Japan's "Marine Day" holiday, and in trading resumed on this day, shares were moving in the 56,000 yen to 57,000 yen range.
According to Bloomberg's tally, Kioxia's average target price stands at 121,959 yen (about 1.11 million won), about 130% above the closing price on the 17th. This was identified as the largest gap between target price and actual share price among the top 100 companies in Japan's TOPIX by market capitalization.
Brokerages continue to raise their target prices. Nomura Securities raised its target price for Kioxia from 115,000 yen to 126,000 yen (about 1,147,192 won) on the 16th. Nomura analyst Virginia Wang forecast that price gains would continue as the NAND flash supply shortage persists. China Renaissance Research also raised its target price to more than 100,000 yen on the 21st.
Supply-Demand Factors Behind the Plunge
The sharp drop in Kioxia's share price over the past month is attributed to a combination of concerns over the sustainability of expanding AI investment and expectations of weaker memory prices due to capacity additions by competitors. Technical selling stemming from Korean leveraged exchange-traded funds (ETFs) was also cited as a factor that widened the decline.
Nevertheless, among experts, the prevailing view was that this correction was a temporary supply-demand issue rather than a deterioration in fundamentals, Bloomberg explained.
Kazuyoshi Saito, senior analyst at Iwai Cosmo Securities, set a target price of 132,000 yen (about 1,201,820 won), assessing that "the company's fundamentals have not changed at all, and its earnings and growth story based on solid AI demand remain valid." He predicted that "once supply-demand distortions caused by Korean leveraged ETFs and the like ease, positive factors such as solid earnings will drive a recovery in the share price."
However, Bloomberg also reported that there were cautious views that a share price recovery would take time.
Ikuo Mitsui, fund manager at Aizawa Securities, said, "Considering recent volatility and Korean ETF fund flows, it will take at least until the end of August for Kioxia to regain its upward momentum," adding, "Investors may diversify into other relatively undervalued stocks rather than concentrating their investments in Kioxia again."
On the other hand, Yoshiharu Izumi, senior analyst at Phillip Securities Japan, maintained a target price of 143,000 yen (about 1,301,757 won). He assessed that "the recent share price weakness was mostly due to technical factors such as overseas ETF selling and margin trading liquidation by Japanese individual investors," and that "there is no change in the fundamentals."
