Samsung Electronics shares drop after Morgan Stanley cuts view, sees chip boom peaking
SEOUL: Samsung Electronics Co Ltd`s shares fell greater than four % to a one-month low on Monday after Morgan Stanley lower its advice on the South Korean tech large, citing issues increase in reminiscence chips is more likely to peak quickly.
A so-called reminiscence chip “super-cycle” of elevated costs as a result of demand for extra firepower in servers and smartphones was the foremost driver of Samsung`s report third-quarter revenue of 14.5 trillion received ($12.91 billion) introduced in October, with traders centered on how lengthy it would final.
A Morgan Stanley analysis report issued on Sunday downgraded its view of Samsung to “equal weight” from “obese” and trimmed its value goal on the inventory by three.four % to 2.eight million received, saying its earnings within the reminiscence section will not be seen rising materially subsequent yr.
“We see draw back threat as NAND costs have began to reverse in 4Q17. In the meantime, visibility on DRAM supply-demand dynamics has decreased past 1Q18,” the report stated.
Samsung Electronics shares have been down four.2 % by 0347 GMT on Monday at 2.66 million received, their largest intra-day share loss in additional than a yr. Nonetheless, the shares are up greater than 47 % this yr, giving it a market worth of round $353 billion.
Some analysts stated Samsung Electronics is much less more likely to be affected by the anticipated developments in chip costs than rivals like SK Hynix Inc, the world`s second-largest maker of reminiscence chips after Samsung.
“The response is a bit oversensitive, as all this was identified,” stated Greg Roh, analyst at HMC Funding & Securities.
“All of us knew that NAND costs are happening, which is definitely wanted to encourage sound demand and enhance shipments. And Samsung is powerful in NAND chips for knowledge centre SSDs (strong state drives) which will probably be much less affected,” Roh stated.
Shares of SK Hynix fell as a lot as three.6 %, the largest intra-day drop since late October.
Samsung Electronics stated in October that it expects a continued tight supply-demand place within the NAND and DRAM area in 2018.