Mobile phones for sale at one of the Samsung stores in Russia.
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For Daiwa Capital Markets Kim, a rebound in smartphone and television sales might be a short-term drivers for Samsungs stock to move greater..
Samsung might sell 79 million smart devices, up 46% quarter-on-quarter, according to Kim..
GUANGZHOU, China — Samsung shares could rally over 40% in the next year, according to one analyst who sees TV and mobile phone sales rebounding sharply in the near-term and a boost in the chip division.
Sanjeev Rana, analyst at CLSA, likewise increased his forecast for smartphone deliveries to 80 million systems, up from 69 million formerly, in a note published previously today..
Samsung launched two high-end mobile phones in the last few weeks. In August, it introduced the Galaxy Note 20 and a $ 1,999 folding phone called the Galaxy Z Fold 2 this month..
Near-term drivers.
While Huawei handled to end up being the number one smart device maker in the second quarter and surpass Samsung for the very first time, it did so by getting a big market share in China. Meanwhile, its efficiency in worldwide markets took a hit. Huawei is feeling the impacts of U.S. sanctions which have actually cut off its access to Google Android on its most recent flagship handsets..
” We anticipate strong incomes upside to Samsung Electronics (SEC) earnings in 3Q20, led by the set gadget (mobile and television) division,” Kim stated in a note. “In addition, we see several catalysts for SEC in 2021 on chances from 5G, memory and foundry, which should drive a rebound in its share cost, in our view.”.
Overall, experts are bullish on Samsungs outlook over the next year and expect the stock to strike new record highs..
Part of the pressure on shares has likewise come from weak point in the rates of DRAM, a type of memory semiconductor that is a crucial driver of Samsungs organization..
Huawei said on Thursday that it would bring its own os, HarmonyOS, to its smartphones next year..
Typically, analysts expect the South Korean electronics giant to see shares increase to 71,376.32 Korean won ($ 60.06) in 12 months, up 20%, according to Refinitiv data..
” While we assume SEC to maintain cost savings in the middle of COVID-19, we expect a sharp rebound in sales of smartphones and TVs to drive robust earnings advantage in 3Q20,” Kim said.
Samsung shares hit an all-time intraday high of 62,800 Korean won ($ 52.84) in mid-January on hopes of a strong 2020. However after the coronavirus pandemic spread worldwide, shares fell as low as 42,300 Korean won ($ 35.59) in March, amid the wider global market sell-off. Considering that then, the stock has actually recovered, however is still below Januarys record high.
Overall, Kim expects Samsung to publish revenue of 65.2 trillion Korean won ($ 54.86 billion), up 23% quarter on quarter and 5% year on year. Meanwhile, he anticipates operating revenue to come in at 10.5 trillion Korean won ($ 8.83 billion), up 29% on the quarter and 35% greater on the year. That is above market expectations..
” It appears Samsung is benefitting from Huaweis issues in Europe and Latam and anti-China belief in India,” Rana told CNBC by e-mail.
Kim said he forecasts that revenue for the two organization units that house tvs and smartphones will grow out of the component department, which consists of semiconductors and displays, for the very first time since the second quarter of 2016..
SK Kim, expert at Daiwa Capital Markets, raised his 12-month rate target on the stock to 85,000 Korean won ($ 71.52) from 82,000 Korean won. That represents upside of around 45% from Wednesdays close, when Kim issued his target price modification..
5G and chips ahead.
Samsung shares hit an all-time intraday high of 62,800 Korean won ($ 52.84) in mid-January on hopes of a strong 2020. In general, Kim expects Samsung to publish earnings of 65.2 trillion Korean won ($ 54.86 billion), up 23% quarter on quarter and 5% year on year. While Huawei handled to end up being the number one mobile phone maker in the second quarter and surpass Samsung for the very first time, it did so by getting a huge market share in China. That has actually led to so-called DRAM stock to remain “stable,” providing Samsung an “edge in agreement ASP (average selling price) settlements” with gadget makers. Samsung is likewise one of the leading chip foundries.
Analysts are anticipating more significant deals in other non-memory locations..
Kim stated the Verizon offer might result in operating earnings of 1.2 trillion Korean won ($ 1.01 billion) by 2025.
In the third quarter, Rana in his note said that there has actually been a rush of orders from Huawei and other mobile phones makers aiming to “take advantage of Huaweis concerns” for memory chips. That has actually resulted in so-called DRAM inventory to remain “steady,” offering Samsung an “edge in agreement ASP (average asking price) negotiations” with gadget makers. A stable supply is better than excessive supply as it permits Samsung to have greater bargaining power on costs.
Samsung is also among the leading chip foundries. That suggests it makes semiconductors for other firms. Earlier this month, Nvidia introduced a new variety of GeForce RTX 30 Series of graphics processing units (GPUs) and selected Samsung to make them..
CLSAs Rana projections non-memory income to increase to 30 trillion Korean won ($ 25.24 billion) by 2022 versus 18 trillion this year with operating earnings almost folding this period to 3.8 trillion won ($ 3.2 billion)..
Kim said that patterns including upgraded processing systems in servers and the release of brand-new gaming consoles will likewise assist Samsungs video gaming department. Both Sony and Microsoft are launching flagship consoles this year..
The U.S. has actually successfully blocked Huawei from the marketplace while other nations consisting of Australia and the U.K. have barred the Chinese firm from being part of their next-generation 5G mobile network rollouts.
Meanwhile, Samsungs semiconductor division, which represents about two-thirds of operating earnings, should continue to grow in the near-term and in 2021..
Huaweis concerns are likewise benefitting Samsung in other areas too. The business, which is a smaller player in mobile networking equipment versus Huawei, Ericsson and Nokia, recently won a significant $6.64 billion agreement with Verizon to supply wireless interaction solutions..
