[Edaily Reporter Kim Kyung-eun ] On the 29th, DS Investment & Securities lowered its target price for SK hynix(000660)from 3.1 million won to 2.64 million won. However, the firm maintained its “Buy” rating, noting that expectations for improved fourth-quarter earnings and additional shareholder returns remain valid.

Lee Su-rim, an analyst at DS Investment & Securities, explained, “We lowered the target price by reducing the target price-to-book ratio (PBR) from 3.4x to 3.0x.”

The downward revision of the target price was influenced by a downward adjustment to third-quarter earnings expectations. DS Investment & Securities revised its forecast for SK hynix’s third-quarter revenue downward to 89.5 trillion won—a 13% increase from the previous quarter—and operating profit to 70.1 trillion won, up 16%. It estimated the operating profit margin at 78%.

The primary reason is the exchange rate. The firm lowered its third-quarter won-dollar exchange rate assumption from 1,430 won to 1,370 won. It also analyzed that changes in the product mix and the timing of revenue recognition during the transition to next-generation High Bandwidth Memory (HBM) products had a partial impact.

The firm estimated that the average selling price (ASP) for DRAM in the third quarter rose 15% from the previous quarter, while the NAND ASP increased by 12%. DRAM bit growth (B/G) was revised down to 5% from the previous forecast, while the NAND B/G estimate remained at 4%. With the sales share of low-power DRAM (LPDDR) for servers increasing, operating profit margins are expected to reach 83% for DRAM and 65% for NAND.

DS Investment & Securities analyzed that attention should be focused on the fourth-quarter and 2027 earnings outlook rather than third-quarter results. With market expectations for third-quarter earnings already lowered due to a weakening exchange rate, the firm forecasts that increased revenue contributions from HBM4 and rising memory prices starting in the fourth quarter will drive earnings improvement.

In fact, DS Investment & Securities projected SK hynix’s fourth-quarter revenue at 111.9 trillion won, a 25% increase from the previous quarter. Operating profit is forecast to rise 27% to 89.4 trillion won, with the operating profit margin expected to climb to 80%.

The firm also viewed the likelihood of further HBM price increases in 2027 as high. It anticipates that supply shortages will persist due to rising system shipments, even as the share of 8-layer HBM products expands. Rising costs for base dies and back-end processes resulting from the transition to 8-layer HBM, as well as increased opportunity costs due to rising general-purpose DRAM prices, were cited as factors that would strengthen HBM pricing power.

Shareholder returns were also identified as a driver of stock price growth. The analyst stated, “Expectations for additional shareholder returns to be announced during the third-quarter earnings release and a recovery in fourth-quarter earnings remain catalysts for the stock price,” adding, “The lower-than-expected third-quarter DRAM bit growth is expected to be fully reflected in the fourth quarter.”

DS Investment & Securities projected SK hynix’s operating profit for 2026 to reach 258 trillion won, a 446% year-over-year increase, and 407 trillion won for 2027, a 58% increase. The operating profit margins are expected to be 77% and 80%, respectively.