BARCELONA, SPAIN – FEBRUARY 22: A logo sits illuminated outside the Samsung pavilion on the opening … [+]
Samsung Electronics stock (LSE: SMSN) has had a relatively mixed year, declining by about 7% year-to-date to levels of around $1,700 per share. The stock has also considerably underperformed its consumer electronics and semiconductor rivals. For instance, memory giant Micron stock is up by about 25% year-to-date, while Apple
stock is up 38%. Now Samsung’s business has actually done pretty well through 2021 posting record quarterly results, driven by strong pricing and volumes in its semiconductor business, and robust demand for consumer electronics products earlier in the pandemic. Over Q3 2021, the company saw net profit jump 31% to 12.29 trillion Korean won (about $10 billion). So what’s weighing Samsung stock down?
Firstly, it appears that investors are a bit concerned about the outlook for memory prices, particularly for DRAM, which is the single largest driver of Samsung’s profitability. While Samsung saw memory revenue rise almost 46% year-over-year in Q3, driven by demand from the server market and stronger pricing trends, there are indicators that the market could be peaking. For example, the memory market tracker, TrendForce, indicates that memory prices could contract by between 8% and 13% over Q1 2022 after falling by as much as 8% in Q4 2021.  Samsung’s smartphone business is also seeing some headwinds due to the ongoing component shortage, with sales contracting by about 8% over the last quarter. Samsung’s consumer electronics business, which was a big driver of sales earlier this year, is also seeing growth flatten as the stay-home trend cools off. Overall, we remain neutral on Samsung stock with a price estimate of about $1,700 per share. See our analysis on Samsung Valuation: Expensive or Cheap for more details. For more information on Samsung’s revenue trends and business segments, see our analysis on Samsung Revenue: How Does SMSN Make Money?
Below you’ll find our previous coverage of Samsung stock where you can track our view over time.
[9/7/2021] Is Samsung Stock A Buy?
Samsung Electronics’ stock (LSE: SMSN) has …….