Goldman Sachs reiterates buy rating on Samsung and SK Hynix, comments on price declines

Investing.com -- Goldman Sachs maintained its buy rating on Samsung Electronics and SK Hynix following recent share price declines, according to a research note published Monday.

Samsung Electronics and SK Hynix shares fell 23% and 35% respectively over the past month. Goldman Sachs attributed the decline to concerns about weakening memory pricing expectations, lack of long-term agreement details, higher inventory at module makers, increasing China supply, absence of shareholder return announcements, and SK Hynix's second quarter operating profit miss.

Following the correction, Samsung Electronics trades at 3.6 times 2027 price-to-earnings ratio and 1.4 times price-to-book ratio. SK Hynix trades at 3.5 times price-to-earnings ratio and 1.6 times price-to-book ratio.

Goldman Sachs said the current valuations suggest the market does not believe in the sustainability of solid earnings for these companies. The investment bank addressed eight key investor questions on the memory industry and companies in its report, covering topics including high bandwidth memory pricing, long-term agreements, inventory levels, China DRAM production, and American depositary receipts.

The firm acknowledged that several factors outside of industry and company fundamentals may have contributed to the share price declines.

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