Analysts cut target prices on POSCO Future M after slow Q3 earnings

[Courtesy of POSCO Future M]

POSCO Future M Co. saw its stock price plunge Wednesday after the announcement of its third-quarter earnings that fell below market expectations, raising concerns about a persistent earnings downturn.

Shares of POSCO Future M were trading at 283,500 won ($216) as of 11:40 a.m. on Wednesday, down 7.05 percent from the previous session.

On Tuesday, the battery materials manufacturer reported that its consolidated third-quarter operating profit stood at 37.1 billion won, down 54.6 percent from a year ago. This figure fell significantly short of market expectations polled by Yonhap Infomax.

Analysts attribute the disappointing performance to a slowdown in demand in Europe among other factors and subsequently revised down their target prices for POSCO Future M.

“The third-quarter operating profit significantly underperformed market consensus due to poor performance in the cathode materials division,” said Jeon Chang-hyun, an analyst at Daishin Securities. “A decline in the shipment volume, primarily attributed to weak sales of N65 products in Europe, and rising input costs, adversely affected its profitability.”

“The continued slowdown in demand for EVs in Europe and the inclusion of one-time costs related to increased wages in the fourth quarter are expected to lead to a 16 percent fall in operating profit compared to the third quarter, and therefore an earnings downturn is likely to continue.”

The analyst lowered the target price for POSCO Future M to 400,000 won from 430,000 won.

Other analysts raced to downgrade their target prices: KB Securities from 660,000 won to 400,000 won, Kiwoom Securities from 579,000 won to 484,000 won, Samsung Securities from 370,000 won to 350,000 won, NH Investment & Securities from 560,000 to 430,000 won, IBK Investment & Securities from 470,000 won to 400,000 won, SK Securities from 670,000 won to 406,000 won, Meritz Securities from 450,000 won to 390,000 won, eBest Investment & Securities from 640,000 won to 480,000 won, and Shinyoung Securities from 650,000 to 430,000 won.