Analysts are consecutively lowering their target prices for Hyundai Motor. The automotive market is facing challenges due to sluggish domestic sales and unfavorable exchange rates for exports.
According to financial information provider FnGuide, 39 out of 51 reports (76.5%) released by securities firms last month have downgraded Hyundai's target price. Only 10 reports (19.6%) maintained the current target price, while just 2 reports (3.9%) raised it.
The average reduction among firms that lowered their target prices is 18.5%, equating to a decrease of approximately 120,000 won. Meritz Securities made the most significant cut, slashing its target from 770,000 won to 470,000 won, a 39% reduction. Other firms, including Samsung Securities (-36.9%), Eugene Investment & Securities (-31.7%), Hana Securities (-26.2%), and Mirae Asset Securities (-22.6%), also made substantial cuts.
The widespread downgrades stem from concerns over Hyundai's performance outlook. On October 29, Hyundai reported third-quarter earnings, revealing a 3.4% decline in revenue to 45.11 trillion won, while operating profit increased by 5.5% to 2.67 trillion won. The revenue drop is attributed to decreased sales volumes due to global demand slowdown and production disruptions. Hyundai also revised its annual sales target down from 4.16 million units to 4 million units, a 3.9% reduction. The previously beneficial high exchange rate effect has diminished as the fourth quarter approaches.
Analysts are also taking a cautious stance on Hyundai's profit improvement prospects for next year, citing persistent high interest rates, a strong won, and rising raw material costs. Additionally, the production halt of the Genesis G80 hybrid, a key model for the second half of the year, due to labor disputes poses a long-term challenge.
Uncertainty surrounding shareholder return policies and the company's failure to fully capitalize on its value as a robotics player are further pressures on the stock price. Hyundai's market capitalization has plummeted from 160 trillion won in June, when expectations for Boston Dynamics' humanoid robot Atlas peaked, to 56 trillion won, a 65.1% decrease (104.17 trillion won).
Despite these challenges, analysts maintain a 'buy' recommendation. Moon Yong-kwon, a researcher at Shin Young Securities, stated, "With the launch of seven new models, led by the Tucson, in markets including the U.S., Turkey, Czech Republic, and India, we expect the new models to contribute to improved utilization rates and reduced fixed costs next year, and as the core business recovers, expectations for new ventures will also be reflected."
* This article has been translated by AI.
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