UBS raises SK Hynix target price to 3.2 million won, maintains buy rating
Odaily Planet Daily News UBS published a report stating that SK Hynix is continuously pushing to sign more revised long-term agreements, focusing on DDR5 and NAND Flash for hyperscale data center customers. These contracts have a term of more than 5 years, locking in approximately 60% to 70% of expected volume and price, which will improve future earnings visibility. Based on a forward 12-month price-to-book ratio of 3.65 times, UBS raised its target price for SK Hynix from 3 million won to 3.2 million won and maintained a buy rating.
SK Hynix has already begun to ramp up shipments of HBM4 for the Rubin platform in the second quarter, indicating it has completed its final design adjustments to meet specifications. Although Samsung Electronics' bit market share for HBM in 2027 may be slightly higher than SK Hynix's, at a ratio of 41% to 39%, over the long term, HBM's share of SK Hynix's DRAM business is expected to be higher than its peers. UBS forecasts that HBM's share of DRAM revenue will rise from 15% in 2026 to 58% by 2030. If the average selling price of HBM rises further, it will provide an additional boost to profits in 2027.
UBS stated that shareholder return policies are expected to continue to strengthen, and anticipates that after the ADR listing, share buybacks will commence and gradually accelerate. UBS pointed out that there is still room for further increases in DDR and NAND Flash contract pricing in the second half of 2026. Considering the revised long-term agreements and HBM, UBS forecasts DRAM ASP to increase by 43% quarter-on-quarter in Q2 2026, 21% in Q3, and 13% in Q4; for NAND, it forecasts blended ASP to increase by 43% quarter-on-quarter in Q2, 25% in Q3, and 10% in Q4. Considering the upward revision of ASP forecasts, UBS has raised its operating profit forecast for SK Hynix this year by 7% to 327 trillion won, and by 12% for each of the following two years to 623 trillion won and 667 trillion won, respectively.
