Securities analysts have determined that Samsung Electronics (005930.KS) is in an "extremely undervalued phase" compared to major competitors, with sufficient momentum for a stock price increase. Samsung Electronics shares recorded a yearly high of 112,400 won on December 4 before fluctuating in the high 100,000 won range.
KB Securities released a report on Wednesday forecasting that Samsung Electronics' fourth-quarter semiconductor operating profit will surge fivefold compared to the same period last year. The brokerage maintained its target price of 160,000 won and "buy" rating, naming the stock its top pick in the semiconductor sector.
"Fourth-quarter semiconductor operating profit is expected to increase 422% year-on-year, signaling entry into a rapid profit growth cycle," Kim Dong-won, head of KB Securities' research division, said in the report. "Samsung Electronics is recording the cheapest valuation among global DRAM makers despite having the largest DRAM production capacity, which we consider an extremely undervalued phase."
Samsung Electronics is regaining competitiveness in the high-bandwidth memory (HBM) market. KB Securities forecast that Samsung's HBM shipments next year will increase 203% compared to this year, approximately six times higher than the projected global HBM growth rate of 32%. Demand for HBM is growing from companies producing general-purpose and advanced graphics processing units (GPUs) and central processing units (CPUs) such as Nvidia and AMD, as well as from application-specific integrated circuit (ASIC) companies with their own artificial intelligence chips including Google, Microsoft, Amazon, and Meta. Samsung is expected to capture this demand.
Samsung Electronics shares were trading strong in the Nextrade (NXT) pre-market session on Wednesday. As of 8:39 a.m., shares were trading at 109,400 won, up 1.30% from the previous trading day. Market watchers are focused on whether the stock can reclaim the 110,000 won level for the first time in about a month. Samsung Electronics recorded a 52-week high of 112,400 won on December 4, with the closing price high of 111,100 won recorded on December 3.
The U.S. Federal Reserve cut its benchmark interest rate by 0.25 percentage points on Tuesday, and New York stock markets showed strength, providing sufficient upward momentum for the domestic market.
"Samsung Electronics will begin mass production of HBM4 in the first quarter of next year, with HBM4 shipments expected to increase significantly from the second quarter," Kim said. "Demand for HBM4 adoption from ASIC companies through Broadcom will increase, and shipments of HBM4 for Nvidia's 'Rubin' will begin in earnest."
