Global investment bank Citigroup slightly lowered its target price for Samsung Electronics, citing the potential cost burden from a possible union-wide strike. While near-term earnings risks have increased, Citi said the broader industry direction remains intact.
According to Yonhap News Agency on Saturday, Citi analyst Peter Lee said in an April 30 report that he cut Samsung Electronics’ target price to 300,000 won from 320,000 won. He maintained a “buy” rating. The reduction was limited, but the report formally factored in labor-management risks.
Lee said that if a strike materializes, provisions tied to performance pay could rise and weigh on results. He cited the strike’s intensity and duration as key variables that could expand costs. Reflecting that risk, he lowered his operating profit forecasts by 10% for this year and 11% for next year. He described the impact as largely one-time in nature, but said it could still pressure short-term profitability.
He said Samsung Electronics remains a leading beneficiary of improving memory-market conditions, but warned that escalating labor tensions could make near-term earnings more volatile. With market expectations elevated, unexpected costs could also increase share-price swings, he added.
Samsung Electronics’ union joint struggle headquarters has demanded performance pay equal to 15% of operating profit with no cap and has warned of a general strike from May 21 to June 7. Because the strike’s scale could change depending on negotiations, investors are watching the risk of a prolonged walkout and when related costs might be reflected. Hana Securities recently said uncertainty over operating profit estimates rose due to the bonus-related strike issue, contributing to relatively weak share performance.
Even so, analysts said stronger memory demand tied to expanding artificial intelligence investment remains in place. With continued demand from data centers and high-performance computing, the upward trend in DRAM and NAND prices is expected to persist, and demand is forecast to outpace supply for some time. Many see the medium- to long-term upcycle as still solid.
Separately, BNK Investment & Securities previously lowered its rating on SK hynix to “hold,” citing weaker profitability as the company increases the share of next-generation products such as HBM4. The firm said that even in an improving market, shifts in product mix and cost structures can lead to diverging results by company.
* This article has been translated by AI.
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