On Monday, Citi reaffirmed its Buy rating on Samsung Electronics Co Ltd (KS:005930:KS) (OTC: SSNLF (OTC:SSNLF)) with a steady price target of KRW97,000.00. The company, which generated $222.3 billion in revenue over the last twelve months and maintains strong financial health according to InvestingPro metrics, is adjusting to market dynamics. The firm adjusted its financial model for Samsung to account for the November Dynamic Random-Access Memory (DRAM) Average Selling Price (ASP) and recent updates to its 2025E ASP forecasts.
The analysis by Citi reflects a modification in the expected growth rate for DRAM ASP for the first quarter of 2025, revising it to a decrease of 5% from the previously estimated 3% drop. This change is attributed to a short-term demand slump in conventional DRAM. However, the outlook for the remaining quarters of 2025 is more optimistic, with growth projections adjusted to 0%, 5%, and 9% for the second, third, and fourth quarters, respectively.
With a healthy gross profit margin of 36.7% and strong cash position, Samsung appears well-positioned to navigate this transition. These revisions are based on the anticipated better mix of high-performance DDR5 and High Bandwidth (NASDAQ:BAND) Memory (HBM) products.
Conversely, the firm has lowered its growth assumptions for NAND ASP for the same period. The new expectations are for a decline of 6%, 2%, and then a rise of 1% and 4% for each subsequent quarter of 2025. This downward revision is due to a larger-than-expected price erosion stemming from weaker demand, which is likely to counterbalance the profitability from DRAM.
Despite these adjustments, Citi's stance on Samsung's stock remains unchanged. The analyst highlighted that the anticipated recovery in DRAM prices is now expected to begin in the second quarter of 2025, sooner than initially predicted.
This earlier recovery is seen as a positive driver for Samsung's share price movement in the future. InvestingPro data reveals the stock is trading near its 52-week low, with 7 analysts recently revising their earnings expectations. Subscribers can access 12 additional ProTips and comprehensive financial analysis through the Pro Research Report.
In other recent news, Samsung Electronics Co (F:SAMEq). Ltd. reported a sequential increase of 7% in Q3 2024 revenue, reaching KRW 79.1 trillion, primarily driven by a 13% rise in revenue from its Mobile eXperience (MX) division. However, the company's operating profit declined to KRW 9.2 trillion due to one-off costs and currency fluctuations. Despite these challenges, Samsung projects a positive trend in market demand for 2025, focusing on high-value products and advanced technologies, particularly in semiconductors and displays.
The company also declared a dividend of KRW 361 per share, totaling KRW 9.8 trillion for the year. Samsung is investing in next-gen semiconductor R&D and advanced process node conversion to boost its competitiveness. The company has plans to enhance its foldable devices with AI features, reflecting its strategic positioning to navigate market challenges and enhance its product offerings.
On a related note, JPMorgan (NYSE:JPM) maintained its Overweight rating on Samsung's stock, despite a slight reduction in its price target. The firm cited Samsung's improving high bandwidth memory performance and upcoming strategic initiatives as key factors that could influence the stock's movement. The revised price target is set for June 2025, following a slight cut in JPMorgan's earnings per share estimates for the company.
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