Buy Kakao stock before May: Daol I&S report

[Source: Kakao Corp.]

Seoul-based brokerage firm Daol Investment & Securities Co. said in a report on Thursday that despite a recent decline in stock value, Kakao Corp. is expected to see a rebound in profits and increased returns for shareholders via effective cost management.

Daol Investment & Securities analyst Kim Ha-jung is optimistic about Kakao‘s profit recovery in 2024, with the company set to introduce rigorous cost control measures throughout the year. Kim noted that companywide restructuring could help mitigate the deficits generated in some domains, such as cloud services and artificial intelligence (AI), adding that the company’s entertainment division, which turned profitable in the fourth quarter of 2023, is expected to sustain the positive performance.

Kim forecast growth for Kakao‘s commerce segment, particularly driven by increased sales of luxury gifts and enhanced advertising for gift-based commerce, predicting that Kakao’s annual operating profit will hit 805 billion won ($655 million) in 2024 and Kakao‘s next management plan, including a set of new shareholder return policies, will be unveiled no later than May. Kim also suggested that investors consider buying Kakao shares ahead of this announcement despite recent market fluctuations.

Maintaining a “buy” rating, Kim set a price target of 82,000 won ($61.70) per share for Kakao. On the previous trading day, Kakao’s stock closed at 51,900 won per share, showing a slight increase of 0.39 percent from the previous trading day.