Most South Korean brokerages have maintained or raised their price target for Samsung Biologics (207940.KS) to 2 million won after the contract drug manufacturer posted its best quarterly results on record in the third quarter.
Six of the 10 brokerages that published research notes on Samsung Biologics on the 22nd set their price target at 2 million won, according to data provider FnGuide (064850.KQ). That implies about 41.1% upside from the previous session's close of 1,417,000 won.
The remaining brokerages set targets of 1.8 million to 1.95 million won, close to the 2 million won mark. Analysts said revenue contributions from new plants increased despite a stronger won and the fallout from a strike, and that conditions for additional orders could improve as customer concerns about production disruptions ease.
Kiwoom Securities, which raised its target to 2 million won from 1.98 million won, said Samsung Biologics beat market expectations in the third quarter on revenue recognition from its Rockville plant and the ramp-up of its fifth plant. The brokerage said the chances of winning new orders have grown further after the union postponed a second strike when a court broadened the scope of its injunction against industrial action.
Samsung Biologics said in a regulatory filing the previous day that third-quarter revenue rose 19% from a year earlier to 1.4903 trillion won (about $1 billion) and operating profit rose 1% to 640.1 billion won (about $446 million). Both were quarterly records. "We expect construction of the sixth plant to begin between the end of this year and early next year, in line with expanding orders," said Heo Hye-min, an analyst at Kiwoom Securities. "Next year, solid growth should continue on a wider ramp-up at the fifth plant and earnings contributions from the Rockville plant and polypeptides."
Meritz Securities, which kept its target at 2 million won, said the timing at which new orders turn into actual contracts and the pace of the fifth plant's shift to commercial production are the key variables for medium-term earnings. "Labor talks are still underway, but lower customer concern about production stability would be positive for new orders," said Kim Jun-young, an analyst at Meritz Securities. "The real profit contribution from commercial production at the fifth plant is expected to widen in the second half of next year."
Samsung Securities, which kept its target at 1.8 million won — the lowest among the brokerages — said it is important to confirm whether order inquiries that have recovered since tariff uncertainty eased translate into new orders next year. "Revenue grew on full utilization of plants one through four and contributions from the Rockville plant and the fifth plant, but operating profit growth slowed as the cost-of-sales ratio rose," said Han Sung-min, an analyst at Samsung Securities.
