SM Entertainment is experiencing a decline of over 2% in its stock price due to a weak outlook for its third-quarter earnings.
According to the Korea Exchange, as of 1:41 PM on October 20, SM's shares were trading at 84,500 won, down 2.87% (2,500 won) from the previous trading day.
Analysts predict that SM's third-quarter performance will fall short of market expectations. The decline in profitability is attributed to a decrease in album releases and large-scale concerts from major artists.
Yujin Investment & Securities estimates that SM's third-quarter revenue will drop 14.9% year-on-year to 273.7 billion won, with operating profit expected to fall 30.8% to 33.3 billion won. These figures are below market forecasts.
Lee Hyun-ji, a researcher at Yujin Investment & Securities, stated, "Aside from NCT 127, there have been no significant album releases, and concerts have primarily been small fan events, leading to poor performance in both revenue and profitability."
Daol Investment & Securities also anticipates weak third-quarter results. However, they expect growth to rebound next year with the debut of a new boy group and expanded tours for major artists.
Im Do-young, a researcher at Daol Investment & Securities, noted, "The visibility of growth centered on core operations is highest in 2027," and raised SM's target stock price from 110,000 won to 120,000 won.
Yujin Investment & Securities maintains a 'buy' rating and a target price of 110,000 won, positively assessing the upcoming comebacks of Rise and NCT WISH, along with the expansion of global tours.
* This article has been translated by AI.
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