- JPMorgan initiated coverage on SK Hynix with an Overweight rating and $245 target
- Target price is set for June 2027, reflecting a 20% premium on local share price
- Expected 34% compound annual growth rate in earnings per share over two years
JPMorgan has initiated coverage on South Korean memory-chip maker SK Hynix with an Overweight rating and a $245 price target, betting on sustained demand for memory chips from the artificial intelligence industry.
The investment bank has set the target for June 2027, based on a 20% premium for the company's American depositary receipts over its local share price target. The valuation implies about seven times the average earnings per share expected for fiscal 2026-27.
JPMorgan expects SK Hynix to deliver a 34% compound annual growth rate in earnings per share over the next two years, underscoring its bullish view on the company's growth prospects.
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The stock was recently trading at around $198.63, close to its 52-week high of $199.87. SK Hynix is also trading at a relatively low price-to-earnings multiple of around 7.1, despite gross profit margins of about 76%.
JPMorgan said SK Hynix has secured more than 50% of its capacity through long-term agreements, while the company has raised its shareholder return pool to more than 50% of free cash flow.
The bank expects the current AI-driven memory upcycle to last for more than five years, with memory average selling prices likely to rise from the first quarter of 2024 through the fourth quarter of 2028 and beyond.
JPMorgan also sees memory content and value share increasing in next-generation AI architectures, supporting stronger earnings for SK Hynix over the coming years.
The bank estimates a total shareholder return of nearly 42% between 2026 and 2028, backed by the company's commitment to distribute more than half of its free cash flow to shareholders.
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The bullish call comes amid a series of positive analyst views on SK Hynix. Needham recently raised its price target to $220 while retaining a Buy rating, while Barclays maintained its Overweight rating with a $300 target. Goldman Sachs has also retained its Buy rating, despite recent concerns around memory pricing.
SK Hynix is a key supplier of high-bandwidth memory and DRAM, products that are increasingly critical to AI computing infrastructure.
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