According to Goldman Sachs’ Marcus Shin, “Strong execution in hardware, preemptive investments in components, and unique synergy from vertical integration over the past two decades have led to Samsung Electronics Co Ltd (SEC) becoming one of the largest companies in the global TMT market in terms of sales/profit.”
The analyst maintained a Neutral rating on SAMSUNG ELECTRONIC KRW5000 SSNLF, with a price target of W1,300,000.
Moving Ahead From Smartphones
Shin mentioned, however, that the company currently faces as a structural decline in hardware profits, especially smartphones, along with new growth drivers contributing only limited earnings.
“We forecast SEC’s earnings to decline gradually through 2025E with solid contributions from semi/OLED being offset by smartphones — pointing to its transformation to a capex-heavy semi company from a smartphone maker,” Shin stated.
Potential Opportunities
Shin believes that Samsung could leverage its share of the hardware through aggressive pricing, while continuing to generate revenue of W18 trillion and EBIT of W10 trillion from its mobile services by the end of 2025.
The analyst also believes that the company’s foldable display could “drive the next hardware product cycle based on a differentiated form factor and better mobility with multiple devices converging into one.”
Shin expects Samsung to maintain a leading share of the AM OLED market, with 80 percent of its revenues coming from this market by the end of 2025.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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