KIS trims profit outlook but leaves target price at KRW 3.8 million
Korea Investment Securities cut its operating profit forecasts for SK Hynix for 2026 and 2027 by 9% and 11%, respectively, according to a market note cited by BlockBeats on July 13. The firm kept its target price unchanged at KRW 3.8 million.
KIS said the revision did not reflect weaker demand. Instead, it tied the change to a reassessment of pricing under long-term supply contracts. Demand for high-bandwidth memory, or HBM, remains firm, especially as AI server and GPU supply chains continue to expand.
Second-quarter margin still seen near historical highs
KIS estimated SK Hynix posted about KRW 80.9 trillion in second-quarter revenue and around KRW 60.4 trillion in operating profit. Based on those figures, the operating margin would be close to 75%.
That leaves profitability at a historically elevated level. In KIS’s view, the issue is not that SK Hynix cannot generate earnings, but that it may not earn as much as the market had previously priced in.
Long-term contracts may cap earnings upside
KIS expects the memory industry’s transaction structure over the next three to five years to move more heavily toward long-term supply agreements. Those contracts can lock in customers, capacity and cash flow. They can also reduce manufacturers’ ability to fully capture upside when spot prices for DRAM or HBM jump in phases.
As a result, long-term contract pricing may smooth profit margins and limit room for further upward revisions to earnings forecasts. For investors, the SK Hynix story is shifting from “AI memory scarcity” to how that scarcity is priced.
Revision seen as a reset of valuation assumptions
KIS said large-scale shipments of HBM4 could still lift average selling prices. Even so, long-term contracts mean the gains may not be reflected in the income statement in the same way as spot-market pricing.
By keeping its target price unchanged, KIS signaled that its medium- to long-term view on SK Hynix has not changed. The adjustment looks more like a reset of valuation assumptions than a rejection of the company’s fundamentals. The market may react to the earnings downgrade headline in the short term, but the larger question is how much premium investors are willing to pay for certainty once long-term contracts become the main structure in the sector.