Analysts remain bullish on Samsung Electronics

By Kim Bo-eun

Expectations are growing that Samsung Electronics' share price will rise further, after it exceeded 50,000 won ($42.08), Monday, for the first time in 16 months.

A recovery in the semiconductor industry is seen to be behind the rise, as well as progress in trade talks between the U.S. and China, according to analysts.

After the tech giant conducted a stock split on May 4, 2018, the last time the share price rose above 50,000 won was on June 7 last year, when the price stood at 50,600 won.

Foreign investors and institutional investors each bought 83.5 billion won and 83.7 billion won worth of shares, Monday.

Samsung's share price closed at 50,700 won, Wednesday, rising 1.2 percent from a day earlier.

Brokerages began raising their target price for Samsung Electronics shares after the price rose above 49,000 won last month.

The price actually began to rise after the chipmaker posted a better-than-expected third-quarter operating profit of 7.7 trillion won.

Kiwoom Securities raised its target price to 59,000 won, from 55,000 won, based on Samsung's estimated earnings for the third quarter.

The continued rise in Samsung's stock price appears to be buoyed by expectations for the company's earnings especially in its smartphone business, based on improvements in the semiconductor industry in which inventory is decreasing.

According to market tracker FnGuide, Samsung Electronics' operating profit for the fourth quarter is forecast to fall 34.79 percent from the same period a year earlier, but is expected to be maintained at around 7 trillion won.

Based on this expectation, NH Investment & Securities put its target price at 63,000 won, Monday.

“This year's operating profit for the semiconductor business is forecast to record 14.23 trillion won, a 68 percent fall from the previous year, but the figure for next year is forecast to be 31.86 trillion won, a 123.9 percent jump, leading overall performance,” NH analyst Do Hyun-woo said.

The alleviation of tension between the world's two largest economies, after they reached a partial trade deal, is also seen as a driving factor for rising share prices.

“Even if concerns over an expansion of the trade feud between the U.S. and China were to be minimized, chip demand for servers will recover based on resumed investments in servers to prepare for expansion of the 5G market,” KB Securities analyst Kim Dong-won said.