IBK Investment & Securities said Samsung Electronics (005930.KS) shares are trading well below fair value given the chipmaker's steady profit growth, with memory demand expected to hold up through next year. The brokerage maintained its "buy" rating and kept its target price unchanged at 460,000 won.
"If the memory supply shortage drags on, profitability will stay around current levels while earnings grow steadily," analyst Kim Woon-ho said on the 3rd. "The stock is now significantly undervalued."
He expects third-quarter results to fall short of his earlier forecast. Revenue is projected at 195.2 trillion won, up 13.8% from the previous quarter, with operating profit at 101.7 trillion won, up 13.6%. The Device Solutions division is forecast to post revenue of 149.9 trillion won and operating profit of 101.8 trillion won, while the display business is seen generating 8.8 trillion won in revenue and 900 billion won in operating profit.
The mobile experience and networks business is expected to report revenue of 34.3 trillion won and an operating loss of about 1.1 trillion won, while the visual display and home appliance business is seen widening its operating loss.
"The operating margin is forecast at 52.1%, down 0.1 percentage point from the previous quarter," Kim said. "The won-dollar exchange rate appears to have been the main variable, and part of the performance bonuses not paid out in the second quarter was likely booked in the third quarter."
He described the company's shareholder return policy as a positive factor that should drive the share price higher. "Share buybacks will not be large, but returns through dividends will be the biggest ever, a level that compares favorably with leading global IT companies," Kim said. "No memory maker has ever paid out more than 100 trillion won in shareholder returns, so how that affects the stock is worth watching."
"This is not an improvement in earnings per share through buybacks, but stable and sustained returns of this scale will be a catalyst for the stock to be valued at a higher level," he added.
Separately, the average selling price of high-bandwidth memory produced by Samsung Electronics, SK hynix (000660.KS) and other memory makers is expected to more than double next year. Market researcher TrendForce raised its 2027 HBM price forecast on the 30th of last month, citing a rising share of sixth-generation HBM4 and continued supply constraints. TrendForce projects that the blended average selling price for HBM, which reflects the sales mix across products, will surge 121% in 2027 from a year earlier.
