[Edaily Reporter kyoungeun kim ] LG Display(034220)is expected to report third-quarter earnings that fall significantly short of market expectations due to a weakening exchange rate, pressure to lower selling prices, and sluggish demand in the IT sector. However, analysts note that as the company completes its structural reforms and resumes capital expenditures (CAPEX) starting next year, the direction of its investment cycle will be a key determinant of its stock price.

In a report released on the 8th, Park Hyung-woo, an analyst at SKSecurities, estimated LG Display’s third-quarter operating profit at 233.6 billion won, a 46% year-over-year decline. This figure is 33.3% below the consensus estimate of 351 billion won. Revenue is expected to be 6.9285 trillion won, similar to the previous year. While maintaining a “Buy” rating, he lowered the target price from 16,000 won to 12,500 won. The previous day’s closing price was 8,250 won.

Analyst Park stated, “We are lowering our profit expectations even as we enter the peak season,” citing three adverse factors. He explained, “The impact of the falling won-dollar exchange rate is the most significant; a 10-won fluctuation has historically resulted in a sensitivity of 5 to 8 billion won in monthly operating profit.” He continued, “Due to rising costs for numerous components, including memory chips, customers for small-sized panels are demanding lower prices, and in the tablet and PC markets, cost pressures are being passed on to consumers, leading to a decline in demand.”

He also viewed a downward revision of the fourth-quarter forecast as inevitable. Considering the uncertainty surrounding orders for smartphone components from global set manufacturers and North American clients, he conservatively estimated fourth-quarter operating profit at 201.8 billion won. Accordingly, the annual operating profit estimate for this year was lowered by 44% from the previous 846 billion won to 474 billion won.

The analyst identified the direction of the investment cycle, rather than quarterly earnings, as the key determinant of the stock price. Analyst Park stated, “Through this year, we have focused on improving our business fundamentals by minimizing capital expenditures, managing depreciation expenses, and implementing voluntary retirement programs, with the goal of normalizing profits.” He added, “Starting in 2027, we will reevaluate our investment plans for small, medium, and large panels, taking into account new applications, price competitiveness strategies, and production capacity expansion.”

The target stock price was calculated by applying a typical price-to-earnings ratio (P/E ratio) of 10 for the IT hardware sector to the average estimated earnings per share (EPS) for 2027–2028. Analyst Park emphasized, “It is crucial to maintain profitability during the off-season in the first half of next year,” adding, “The core of the medium- to long-term stock price story lies in the capacity expansion set to resume in 2027, and the conditions for a valuation re-rating depend on whether new investments translate into profitability.”