UBS Raises SK Hynix Target Price to 3.2 Million Won, Maintains Buy Rating

2026-07-07 03:12

Odaily reported that UBS stated in a report that SK Hynix is continuously pushing to sign more revised long-term agreements, focusing on DDR5 and NAND Flash for hyperscale data center clients. These contracts have a duration of over five years, with approximately 60% to 70% of expected volume and price already locked in, which will enhance future earnings visibility. Based on a projected price-to-book ratio of 3.65 times for the next 12 months, UBS raised its target price for SK Hynix from 3 million won to 3.2 million won, maintaining a Buy rating.

SK Hynix has already begun increasing shipments of HBM4 used in the Rubin platform in the second quarter, indicating it has completed final design adjustments to meet specifications. Although Samsung Electronics may have a slightly higher HBM bit market share than SK Hynix in 2027, at 41% versus 39%, HBM's proportion in SK Hynix's DRAM business is expected to be higher than its peers in the long term. UBS forecasts that HBM's share of DRAM revenue will rise from 15% in 2026 to 58% by 2030. If HBM average selling prices increase further, it would provide additional support to 2027 profits.

UBS stated that shareholder return policies are expected to continue strengthening and anticipates that share buybacks will commence and gradually accelerate following the ADR listing. UBS noted that there is still room for further price increases in DDR and NAND Flash contract pricing in the second half of 2026. Considering revised long-term agreements and HBM, UBS forecasts DRAM average selling prices will rise 43% quarter-on-quarter in Q2 2026, 21% in Q3, and 13% in Q4. On the NAND side, it expects blended average selling prices to increase 43% quarter-on-quarter in Q2, 25% in Q3, and 10% in Q4. Factoring in upward revisions to average selling price forecasts, UBS raised its operating profit forecast for SK Hynix this year by 7% to 327 trillion won, and by 12% for the following two years to 623 trillion won and 667 trillion won, respectively.