Samsung Electronics shares expected to bottom out in Q2

Tech giant's stock price fails to recover despite record-high sales

By Lee Min-hyung

Samsung Electronics shares are expected to hit the bottom in the 2nd quarter and bounce back sometime in the third quarter, after memory chip prices bottom out in the near future, analysts said.

Investors have been going on a selling spree of Samsung shares so far this year, due to a skeptical semiconductor market outlook over falling DRAM prices.

The stock price of the electronics company reached a historic high of around 89,000 won per share in early January 2021. This was a twofold increase, since Samsung shares nosedived in March 2020 amid the pandemic-induced market crash.

But the firm's share price has failed to recover to previous levels and slipped below 70,000 won last month. On Thursday, Samsung shares closed at 68,000 won on the benchmark KOSPI, down by 0.73 percent or 500 won from the previous day.

Market analysts expect the company not to suffer any major stock falls in the latter half of this year, as the pace of the DRAM price fall will slow gradually.

Samsung's Galaxy smartphones are promoted in front of its flagship store in Seoul, April 7. Yonhap

“Samsung's recent stock fall reflected lingering fear in the DRAM market,” said Kim Un-ho, an analyst at IBK Investment & Securities. “It is hard for the falling DRAM price to make a meaningful rebound, but it is unlikely to experience any more major plunges.”

Even Samsung's surprising earnings report released on the same day did not help rev up its stock price growth. In a preliminary earnings report, the company reported an operating profit of 14.1 trillion won during the January-March period, up 50.32 percent from the previous year. Its sales reached a record-high 77 trillion won, up 17.76 percent over the same period.

Other analysts expected Samsung shares to bottom out in the second quarter and regain momentum for a rebound sometime between the second and third quarters of this year on improving conditions for the memory chip market here and abroad.

“Global chip market conditions remain positive this year, but it remains unclear whether the DRAM industry will continue its growth until next year due to growing inflationary fears, rate hikes and post-pandemic consumption pattern changes,” Eugene Investment & Securities analyst Lee Seung-woo said.

The brokerage house also revised down Samsung Electronics' target stock price to 88,000 won per share from an earlier forecast of 93,000 won, citing the uncertain market outlook.

“But given that Samsung's stock price is currently hovering at the bottom of our yearly stock forecast, we expect Samsung shares to start rising sometime in the second and third quarters,” he said.

NH Investment & Securities also predicted Samsung shares to pick up momentum for a rebound in the near future on its possible second-quarter earnings growth.

“Samsung's operating profit is forecast to rise to 14.9 trillion won between April and June on expanded earnings from its memory chip business,” said Do Hyun-woo, an analyst at the securities firm.