April 25, 2024

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[THE INVESTOR] Samsung Electronics’ shares have dropped in the past week due to the negative outlook on its lower-than-expected profits in the second quarter caused partly by the slowing sales of its premium smartphone Galaxy S9.

Some analysts said, however, the tech giant will “most likely” make a turnaround in the third quarter thanks to several factors, including improving DRAM demand, launch of Galaxy Note 9 and Apple’s new iPhones during the July-September period. Samsung supplies mobile OLED displays and chips for the US tech behemoth.

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Samsung’s negative smartphone sales outlook drags down shares

“The second quarter earnings will be somewhat disappointing, but the company will likely post a record operating profit of 17 trillion won(US$15.40 billion) in the third quarter thanks to robust sales of chips and displays,” Choi Do-yeon, an analyst from Shinhan Investment, noted in a report.

He maintained a “buy” rating with the target price of 64,000 won.

Other local investment firms also forecast an earnings improvement in the third quarter.

EBEST Investment & Securities and Korea Investment & Securities, projected that Samsung may earn 16 trillion won and 16.1 trillion won, respectively, while Daishin Securities forecast a 17.6 trillion won operating profit.

Because of the underperformance of its flagship Galaxy S9 in terms of sales, Samsung is expected to record an operating profit lower than previous estimates in the second quarter.

Eugene Investment & Securities has lowered the forecast from 15.7 trillion won to 15.2 trillion won while DB Financial Investment adjusted its own estimates from 15.8 trillion won to 14.9 trillion won. The tech giant raked in 14.07 trillion won in the April-June period last year.

“Despite the relatively stable shipments of S9 in the first quarter, the actual sales in the second quarter seem to have been disappointing,” said Lee Seung-woo, an analyst at Eugene Investment & Securities, forecasting the shipments in the first year will stand at some 30 million, the lowest since the third-generation Galaxy S was released in 2012.

By Kim Young-won (wone0102@heraldcorp.com)