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Why brokerages lowered SK hynix’s target price despite earnings surprise
SK hynix's memory chip fabrication facility in Cheongju, North Chungcheong Province
/ Courtesy of SK hyinix
By Jun Ji-hye
Securities firms are revising down their target prices for SK hynix despite the company's stronger-than-expected earnings in the first quarter, industry officials said Friday.
Analysts attribute the downward revisions to heightened uncertainties surrounding the U.S. Donald Trump administration’s proposed "reciprocal" tariffs, warning that the world’s second-largest memory chipmaker could face a possible demand correction in the latter half of the year.
According to financial data provider FnGuide, Mirae Asset Securities lowered its target price for SK hynix to 244,000 won ($170) from 277,000 won, while Shinyoung Securities slashed its target to 260,000 won from 280,000 won. BNK Securities and iM Securities cut their estimates to 250,000 won from 310,000 won, and to 200,000 won from 210,000 won, respectively.
SK hynix posted first-quarter revenue of 17.6 trillion won, a 41.9 percent increase year-on-year. Operating profit came in at 7.4 trillion won, up 157.8 percent from the same period last year.
The surprise earnings results exceeded market consensus by 2.3 percent and 12.8 percent, respectively.
Despite the robust performance, market experts cautioned that it is time to prepare for rising uncertainties surrounding global trade.
With the U.S. ramping up its aggressive tariff policies and the potential entry of competitors in the high-bandwidth memory (HBM) segment in the second half of the year, analysts noted that a slowdown in demand could become unavoidable.
“If item-specific tariffs are imposed following the expiration of the reciprocal tariff grace period, electronics manufacturers are likely to pull forward orders originally scheduled for the second half into the second quarter,” said Park Sang-wook, an analyst at Shinyoung Securities. “In such a scenario, second-quarter earnings could mark the annual peak, while demand adjustments in the third and fourth quarters may lead to a sequential decline in performance.”
In addition, BNK Securities analyst Lee Min-hee cited mounting concerns over a potential slowdown in artificial intelligence (AI) demand.
"As AI investments by leading cloud service providers begin to slow, the outlook for HBM demand next year remains uncertain,” Lee said. “While SK hynix continues to maintain a technological lead in HBM and is projected to increase its share of the DRAM market this year, the weakening demand outlook calls for a more conservative approach to valuation."
Meanwhile, iM Securities highlighted a possible global economic slowdown, pointing out that SK hynix’s stock has generally mirrored the trends in the United States. ISM Manufacturing Index — a monthly indicator of the health of the U.S. manufacturing sector — has been declining recently.
In light of this, the brokerage advised adopting a cautious approach and monitoring the situation for the time being, rather than making active trading decisions.