Analysts bet Samsung Elec, LG Elec, Kakao, NCSoft, Posco stocks to go higher

Korean brokerage houses shrugged off overheat concerns over the record-breaking stock prices by revising target prices up than down.

According to Seoul-based financial market data provider FnGuide, local securities analysts have released a total of 654 reports with an upward adjustment made for a stock’s price target this month until Friday. That is up 81.1 percent compared to four months ago when the Kospi hovered below 2,500-mark. The number of reports with upward adjustment rose in recent months as the Kospi continued to test new historic highs.

Projection for downward move in stock prices was fewer. There were 41 analysts report that revised down the target price for a stock this month to last Friday, sharply down from 124 cases in October.

The stock that received the largest number of upgrades in price target is Samsung Electronics. So far this year, 20 securities firms including market majors Mirae Asset Daewoo and Korea Investment & Securities have raised their price target for Samsung Electronics shares, placing the average at 106,900 won ($97.03) apiece, up 23 percent from a month earlier.

Analysts are paying a special attention the semiconductor market that is expected to have entered the super cycle this year and thus would help boost the Korean memory chip giant’s earnings. Samsung Electronics shares have been rising sharply in recent weeks but analysts believe the stock’s price still has room to head up as the stock is undervalued compared to its global peers such as Micron Technology and TSMC.

“Memory chip business is projected to deliver improvement in earnings until the first half of 2022,” said Choi Do-yeon of Shinhan Investment, seeing more upsides than downsides.

Following Samsung Electronics, Kakao Corp, LG Electronics Inc. and NCSoft Corp. made the top five mentions for stock price upgrades.

Analysts’ optimism was especially high for LG Electronics. The average price target for the tech firm’s shares has been doubled to 177,500 won in just a month, while analysts are continuing to recommend a buy for the stock.

LG Electronics is anticipated to show improvement in its bottom line through its restructuring of loss-incurring smartphone business, noted Park Kang-ho of Daishin Securities. Moreover, the company has gained competitive edge in its business portfolio by forming a strategic partnership with automotive parts supplier Magna International and acquiring automotive lighting firm ZKW, Park added.

Economy-sensitive stocks also made the top 5 – steel maker Posco and builders Daewoo Engineering & Construction and Hyundai Engineering & Construction, amid growing anticipation for economic recovery after vaccine rollouts.

The steel prices are rising across the world, especially in China, that Posco would be able to improve its bottom line in the first half this year, predicted Park Sung-bong of Hana Financial Investment.

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