[New York = E-Daily Seong Joowon Correspondent] Global investment bank UBS issued a “Buy” rating and a target price of $204 for SK hynix(000660) American Depositary Receipts (ADRs) in a client note on the 30th (local time). CNBC reported that this represents a 61% increase over the previous day’s closing price of $126.79.

UBS analyst Nicolas Godois stated, “At current valuations, SK hynix’s stock price does not fully reflect the structurally improved profitability of the memory business.”
According to Investing.com, Analyst Godoy pointed out that SK hynix’s ADR price has fallen 33% from its peak on the 14th and is 13% below the initial public offering (IPO) price of $149. He explained that the current stock price reflects the long-term average return on equity (ROE) of 17.7% from 2012—when the DRAM supply restructuring concluded—through 2022, prior to the artificial intelligence (AI) boom. In contrast, UBS forecasts an average ROE of 40.2% for 2027–2031, indicating a significant gap between market expectations and actual projections.

AI-Driven Expansion of Memory Demand as the Background

UBS noted that the memory industry has undergone dramatic changes due to the proliferation of agentic AI and predicted that demand for memory bits will accelerate through 2027. Specifically, it expects the growth rate of DRAM bit demand to increase from 22% in 2026 to 36% in 2027, while NAND demand is projected to rise from 20% to 23% over the same period. UBS believes that current stock prices do not fully reflect these improvements in profitability, the expansion of free cash flow, and the strengthening of shareholder returns.

Second-Quarter Earnings and HBM4 Negotiations in Focus

According to Investing.com, regarding second-quarter earnings, UBS noted that “the renegotiation of SK hynix’s long-term supply agreements (LTAs) is proceeding at a faster pace than expected.” To date, 10 contracts have been signed, and additional negotiations are underway. UBS analyzed that while this may limit short-term price increases, it will contribute to margin improvement in the long term.
The average selling price (ASP) of DRAM in the second quarter rose 30% compared to the previous quarter. However, UBS explained that the increase was limited due to the growing share of mobile products and the fact that HBM4 shipments did not begin until the latter half of the quarter. UBS reported that management raised its annual capital expenditure (CAPEX) guidance to “the high 40 trillion won range.” UBS valued SK hynix’s shares listed in Korea using a 12-month forward price-to-book (P/B) ratio of 3.65x.
CNBC added that SK hynix is making progress in HBM negotiations for 2027 supply and is expanding production capacity, which will also support margins and long-term growth.