SK Hynix: Records keep rising but the ADS premium caps the margin of safety
Rating HOLD | Previous rating STRONG BUY | 12 month target $146 | Price $150.79
Summary
I downgrade SK Hynix from Strong Buy to Hold. The business continues to execute exceptionally well, but its roughly 45% valuation premium over its Korean-listed equivalent makes further upside harder to justify.
SK Hynix delivered record 3Q FY 2026 revenue of KRW 104.6 Tn and operating profit of KRW 83.3 Tn, with an impressive 80% operating margin. Earnings also exceeded LSEG Smart estimates by 9%.
The HBM growth story remains strong, with accelerating HBM4 shipments and long-term agreements covering more than half of 2027 to 2028 capacity. However, much of this optimism already appears reflected in the share price.
My base case valuation points to approximately $130 per EDS in present value, suggesting limited upside relative to the current market price. Despite strong fundamentals, I see greater justification for holding than initiating new positions at current valuations.
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Source: Maeil Business
