Morgan Stanley Admits Error in SK Hynix Target Price Assessment

Morgan Stanley, a prominent investment bank, recently acknowledged a mistake in its short-term assessment of SK Hynix, a major player in the semiconductor industry. The bank initially forecasted a "semiconductor winter," which led to a significant reduction in its target price for SK hynix. However, the bank has since revised its target price upward, citing strong performance by the company.

SK hynix reported record-breaking quarterly profits and sales in the third quarter of 2024, driven by strong demand for AI memory products. The company's sales of high-bandwidth memory (HBM) and enterprise solid-state drives (eSSD) increased significantly, contributing to a mid-10% rise in the average selling price (ASP) for both DRAM and NAND. This exceptional performance led Morgan Stanley to revise its target price for SK hynix from 120,000 won to 130,000 won.

Despite the upward revision, Morgan Stanley maintained its long-term outlook for the memory semiconductor market, stating that it still believes the market has peaked. The bank identified several risks for SK hynix, including the rapid growth of Chinese competitors, declining prices for DRAM and NAND flash, and a potential slowdown in HBM demand growth after next year.

The initial sell order and subsequent downgrade by Morgan Stanley had an immediate impact on SK hynix's stock price, which plummeted by over 6% on the same day. However, the company's strong performance in the third quarter has since boosted investor confidence, and its stock price has rebounded.

In conclusion, Morgan Stanley's initial "semiconductor winter" forecast influenced its assessment of SK hynix's prospects, leading to a significant reduction in its target price. However, the company's strong performance, particularly in AI memory products, has forced the bank to revise its target price upward. Despite this revision, Morgan Stanley continues to monitor several risks and uncertainties for SK hynix in the long term.