No fear of callbacks! UBS Raises Hynix Price Target, Predicts 'Three Better' Coming

AI-driven storage super cycle accelerates cash,SK HynixAs the core leader of the track, it continues to benefit from the tightening supply and demand pattern and intergenerational iteration of technology.

Although SK Hynix has fallen 8% in the past five trading sessions, according to Chasing Wind Trading Desk, UBS in its latest report released on July 312-month price target raised to 3.2 million won from 3 million won.The report pointed out that the recent stock price adjustment is a short-lived phenomenon, and the three follow-up catalysts — —Long-term supply agreement landing, HBM4 official mass production shipment, potential share buyback after ADR listing will drive valuation repricing。

At the profit forecast level, the report estimates that the company's operating profit in 2026 will reach 32.7 trillion won, about 27% higher than the consensus expectation; 62.3 trillion won in 2027, beating consensus estimates by about 54%.

At the valuation level, the current share price corresponds to a price-to-book ratio of only 2.76 times in 2027, and the implied long-term ROE is about 31.7%, which is significantly lower than the 41.9% forecast by UBS, reflecting that the market has not yet fully priced the structural jump in the company's profitability. Even if the share price has risen by more than 258% since the beginning of the year, UBS judges that there is still enough room for valuation repair.

Short-term repair logic is clear: long-term agreement price lock, HBM4 starting volume, repurchase overweight

First of all,The company is accelerating the advancement of revised long-term agreements (LTAs) for hyperscale cloud vendors, covering DDR5 and NAND Flash. The new contracts have a duration of more than five years and lock in approximately 60% – 70% of the planned shipments and prices, significantly improving the visibility of future earnings and helping to alleviate the pressure on valuation caused by cyclical fluctuations in the memory industry.

Secondly,HBM4 progression enters critical phase。 The report pointed out that SK Hynix has basically completed the final design fine-tuning,Expected to initiate large-scale shipments of HBM4 to Rubin platform in the second quarter of 2026。 AlthoughSamsungIt may lead slightly in HBMbit market share by 41% to 39% in 2027, but SK Hynix has a long-term advantage in HBM's share of DRAM business revenue, which is forecast to increase from 15% in 2026 to 58% in 2030.

Finally,The shareholder return narrative gradually strengthened. Stock Repurchase Program Expected to Start and Gradually Overweight After ADR Listing。 The focus of the market has shifted from the share price increase itself to whether the current valuation adequately reflects higher profit margins, improved free cash flow and continuously improved shareholder returns.

Bullish on Memory Chips, DRAM and NAND Stronger on Bi-Lines

Considering the long-term agreement (LTA) factors and the impact of HBM products, the bank predicts that,SK Hynix DRAM average selling price (ASP) will increase by 43% sequentially in the second quarter of 2026, with DDR hybrid ASP excluding LTA impacts increasing by as much as 67% sequentially； DRAM ASP is expected to rise by another 21% and 13% in the third and fourth quarters, respectively.

For NAND flash, UBS expects hybrid ASP to rise 43%, 25%, and 10% sequentially in the second to fourth quarters of 2026, respectively. The bank noted that,The rise of Agentic AI is significantly driving the storage demand from multiple dimensions such as DDR5/LPDDR5, KV cache and NAND for storage by AI servers.

Accordingly, UBS forecasts that DRAM bit terminal consumption will increase by 36% year-on-year in 2027, up from 22% in 2026; The growth rate of NAND bit terminal consumption will also accelerate from 20%.