The brokerage lifted its target for Samsung Electronics to 550,000 won ($366.7) from 480,000 won, up 14.6 percent, and for SK hynix to 3.8 million won from 3.2 million won, up 18.8 percent. The new targets imply upside of roughly 74 percent and 65 percent from the two stocks' levels in Wednesday morning trading, when both were rising sharply alongside a broad chip rally. Analyst Kim Young-gun said the firm's earnings estimates were unchanged and that the higher targets instead reflected applying valuation multiples closer to those global rivals already command.
The core of the argument is that the Korean pair trade at a deep discount to peers such as Micron Technology and Kioxia. For SK hynix, Kim pointed to a sharp expected jump in profitability: he estimated average return on equity — a measure of how efficiently a company generates profit from shareholders' capital — would reach 66 percent over 2026 to 2028, against a ten-year average of 19 percent, driven by higher memory prices and a growing share of long-term supply agreements. That improvement, he said, justified a higher valuation.
In detail, Kim raised the multiple applied to SK hynix's price-to-book ratio to 6.2 times from 5.3. For Samsung Electronics, he lifted the applied multiple of enterprise value to forward EBITDA — earnings before interest, taxes, depreciation and amortization, a common gauge of cash-generating power — to seven times from six, matching the current average for Micron and Kioxia.
He argued Samsung remains markedly cheaper than its peers. At current prices, its forward price-to-book and price-to-earnings ratios stand at about 2.3 and 5.7 times, against peer averages of 6.2 and 10.1 times. "For now, most companies in the sector are trading strongly and the valuation gap is running in parallel," Kim wrote, "but as individual companies approach their fair value, the multiples should converge toward the upper end."
Kim added that for both companies, a new valuation benchmark, set against next year's earnings, was likely to take shape as the year moves into the second half.
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