Discover the latest update on Samsung Electronics Co Ltd as BofA Securities downgrades the stock and revises the price target. Find out the reasons behind this move and how it could impact your investments.
On Wednesday, BofA Securities adjusted its stance on Samsung Electronics Co Ltd (KS:KS) (OTC: SSNLF), downgrading the stock from Buy to Neutral and revising the price target downward to KRW80,000 from KRW100,000. The firm's analysis suggests a deceleration in Samsung's operating profit, anticipating it to reach only KRW9.9 trillion in the third quarter of 2024, which is a decrease from previous estimates and the consensus of KRW13 trillion.
The forecast for the fourth quarter of 2024 is KRW9.7 trillion, with the expectation of a downturn in memory ASP, contrasting with an upturn in the first half and third quarter of the year. BofA Securities also anticipates an operating loss for Samsung's foundry business in the second half of 2025, citing underutilized capacity and a lack of new orders for NVIDIA's GPUs.
The firm's revised earnings per share estimates show a significant 30-40% reduction for the second half of 2024 and for 2025. This is mainly due to 10-15% lower memory ASP assumptions. According to BofA Securities, these large EPS revisions are likely to prevent any significant rally in Samsung's stock price.
In other recent news, Samsung Electronics Co., Ltd. reported a 3% increase in overall revenue for the second quarter of 2024, reaching KRW 74.1 trillion. This rise was accompanied by a significant growth in operating profit to KRW 10.4 trillion, largely due to higher average selling prices and a strong demand for OLED products.
UBS has maintained its Buy rating for Samsung, citing a favorable supply and demand situation in the memory sector. The firm's analysis indicates potential stability in the memory market, with demand for server DDR5 and enterprise SSDs remaining robust.
Analysis and Breakdown:
In simple terms, BofA Securities' downgrade of Samsung Electronics Co Ltd indicates a potential slowdown in the company's operating profit and earnings per share. This could lead to a decrease in the stock price and impact investors who hold Samsung shares. On the other hand, UBS's Buy rating suggests a more positive outlook for Samsung, highlighting the company's strong position in the memory sector.
For investors, it's essential to consider both perspectives and weigh the potential risks and rewards of holding Samsung stock. Keep an eye on future developments in the memory market and Samsung's performance to make informed investment decisions. Remember, diversification is key to managing risk in your portfolio.