DS Investment & Securities maintained its "buy" rating on SK hynix (000660.KS) and raised its target price to 1.3 million won, saying the chipmaker has entered a phase of earnings leverage driven by rising memory prices, the brokerage said Wednesday.
"We are raising our 2026 operating profit estimate to 211 trillion won, up 348% year-on-year, and our 2027 estimate to 282 trillion won, up 33%," said Lee Su-rim, an analyst at DS Investment & Securities. "Based on the industry's overall production capacity outlook, the supply shortage in commodity DRAM is expected to continue through the end of 2027."
The revision reflects expectations that earnings estimates need to be adjusted upward on the back of the memory chip contract price upcycle expected to continue through the fourth quarter of this year.
DS Investment & Securities also raised its first-quarter operating profit estimate for SK hynix to 39 trillion won, up 104% from the previous quarter. The brokerage projects DRAM average selling price (ASP) rose 75% quarter-on-quarter, while NAND ASP increased 55%.
"We forecast DRAM ASP to rise 163% and NAND to rise 138% this year," Lee said. "Currently, the DRAM spot premium over contract prices stands at 60-70% for DDR5 and 70-90% for DDR4, and this gap will continue to exert upward pressure on contract prices even if spot prices decline."
The analyst also noted potential additional upside if the company's U.S. American Depositary Receipt (ADR) listing materializes this year. "An ADR listing in the second half would expand accessibility for global investors," Lee said. "Given that short-term supply-demand effects are also expected, any pullback should be seen as a buying opportunity."
