RBC Capital Markets said in a research note that artificial intelligence demand continues to exceed supply, and higher prices for high-bandwidth memory, or HBM, could support overall DRAM average selling prices. The firm said SK Hynix is set to keep benefiting from the memory chip upcycle.
RBC sees HBM prices rising through 2027
According to the report, HBM prices could increase by 80% to 100% by 2027. RBC said the DRAM upcycle, which has already lasted 14 quarters, is likely to continue for another five quarters, with supply tightness expected to persist through 2027.
Third-quarter forecast comes in above consensus
RBC expects SK Hynix to post third-quarter results slightly above market consensus. It forecast revenue of 101.2 trillion won and adjusted earnings of 8,917 won per American depositary receipt, or about $6.72.
The bank also said DRAM contract prices rose 20% quarter over quarter in the third quarter and could climb another 15% in the fourth quarter.
Outperform rating maintained with $200 target
RBC reiterated its outperform rating on SK Hynix and kept its price target at $200, about 40% above the latest closing price. In U.S. trading, SK Hynix shares jumped more than 4% on Monday to $142.62.
Other brokerages also point to prolonged shortages
Nomura recently said the memory chip shortage will last until 2028. It maintained buy ratings on Samsung Electronics and SK Hynix, with target prices of 670,000 won and 4.7 million won, respectively.
KB Securities in South Korea said on Monday that the two companies’ price-to-earnings ratios had fallen to about 3 times.
SK Hynix to report earnings on Wednesday
SK Hynix is due to release its third-quarter earnings on Wednesday. A survey by FnGuide showed analysts expect revenue of 98.2 trillion won and operating profit of 77 trillion won.
According to media reports, the company is also considering a special dividend of about 16 trillion won.