However, Morgan Stanley still remains "stubborn": "Our short-term assessment of SK Hynix's stock was wrong, but not our peak estimation of the memory cycle"
Following a strong financial report, Morgan Stanley analysts "rarely" admitted to misjudging SK Hynix's short-term evaluation, raising the company's target price while still maintaining an underweight rating.
On October 24th, Morgan Stanley analysts Shawn Kim and Duan Liu wrote in their report:
"We made a mistake in the short-term evaluation of SK Hynix's stock, but not in our peak estimation of the memory cycle.
We expect 2024 to be another outstanding year for SK Hynix, benefiting from the continued rise in DRAM prices in the fourth quarter, which, although slowing down, can still drive outstanding short-term profits."
Yesterday, SK Hynix's third-quarter financial report showed a 330% year-on-year surge in revenue, with a 94% increase in revenue, thanks to strong sales of AI chips. The report also indicated that in supplying AI accelerators to NVIDIA in terms of high-bandwidth memory, SK Hynix has surpassed Samsung Electronics and Micron Tech.
After the financial report was released, Morgan Stanley analysts raised SK Hynix's target price by 8% to 130,000 Korean won, but maintained an underweight rating.
Today, SK Hynix closed up 1.41% at 201,000 Korean won per share, exceeding Morgan Stanley's target price by 54.62%.
In September, Morgan Stanley had previously downgraded SK Hynix's stock rating. Analysts warned of an impending "winter" in the memory industry, as the industry has entered the late stage of the cycle. There may soon be an oversupply in HBM (High Bandwidth Memory), and a serious imbalance in supply and demand has already emerged in DRAM and other areas.
Affected by this, SK Hynix's stock experienced selling pressure, and the Korean market regulatory agency also launched an investigation.
Morgan Stanley: Hidden Concerns Arise
Although Morgan Stanley analysts raised SK Hynix's target price, among the institutions covering and tracking SK Hynix, Morgan Stanley's target price remains the lowest.
Morgan Stanley analysts believe that SK Hynix is the "least recommended" among the semiconductor stocks covered by Morgan Stanley, as the cyclical shortage of memory chips is coming to an end, and with slowing growth and declining prices, SK Hynix's revenue and profits are under pressure. The analysts wrote in the report:
"Hidden concerns are emerging."
In contrast, HSBC considers SK Hynix a "top pick," with analysts like Ricky Seo emphasizing the crucial leading position of SK Hynix in the HBM market