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Samsung skepticism grows as two more analysts slash estimates

[HONG KONG] Asia's technology rally this year appears to be sputtering as analysts at two firms cut their forecasts yesterday for Samsung Electronics Co's fourth-quarter operating profit, fueling growing skepticism the industry's gains are running out of gas.

HI Investment & Securities Co cut its fourth-quarter operating profit estimate for Samsung by 4.8 per cent to 15.7 trillion won (S$19.5 billion) from 16.5 trillion in a Dec 20 report, reflecting the strong won and bonus payments. Meanwhile, analysts at Korea Investment Holdings Co cut their projection for the same figure by 7.8 per cent in a report published the same day. In the past four weeks six firms have lowered their estimates, according to data compiled by Bloomberg.

Samsung slumped 2.4 per cent to a September low on the news, paring its gain for the year to 38 per cent. The stock touched a record high in November.

The latest estimate cuts come just weeks after Morgan Stanley analysts had to defend their downgrades of Samsung and its rival Taiwan Semiconductor Manufacturing Co after "strong" pushback from some investors. Shawn Kim, analyst with Morgan Stanley, cut his rating and price target for Samsung amid concerns about the South Korean giant's valuation, earnings growth and the memory chip cycle.

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