SK Hynix rises as brokerages launch coverage with bullish ratings

SK Hynix's U.S. shares rose 5% after six brokerages initiated coverage with bullish ratings, citing its dominance in the booming AI memory market and global investor access.

Recently listed U.S. shares of SK Hynix rose ​5% after six brokerages started coverage ​of the South Korean chipmaker with ‌bullish ratings, ​citing its dominance in the booming AI memory market and access to a broader global investor base.

The American Depositary Receipts of SK ‌Hynix, whose primary listing is in Seoul, were last up at $150.08 on Tuesday. However, they are trading 16% below their July 10 listing price due to a recent pullback in semiconductor stocks. The company had ‌priced its ADRs at $149 for the secondary listing and raised about $26.5 billion, aided by strong investor ‌interest in AI-focused high-bandwidth memory (HBM) chips.

Massive AI infrastructure spending has fueled demand for HBM chips, driving up prices and making memory manufacturers key beneficiaries of the artificial intelligence boom. At least six brokerages, including BofA Global Research, started coverage ⁠on SK ​Hynix with a "buy"-equivalent rating. Rosenblatt ⁠Securities set the highest price target on the stock at $320.

Bank of America was the underwriter for SK Hynix's U.S. secondary ⁠offering, along with Citigroup, Goldman Sachs and J.P. Morgan. "We believe the U.S. listing provides an opportunity for SKHY ​shares to re-rate closer to its U.S.-based rival (Micron), which should compound with a more structural ⁠re-rating of shares driven by longer-term visibility and strong tie-in to AI and data center end markets," said analysts at ⁠William ​Blair.

However, the positive reception was in contrast to the company's latest earnings report, which came a few days after the U.S. listing. SK Hynix posted a record quarterly profit but fell ⁠short of analysts' forecasts due to delays in shipments of advanced memory products, raising concerns about the ⁠pace of AI-related spending.

BofA said ⁠SK Hynix remains undervalued, citing strong orders from U.S. technology companies, leadership in high-end memory chips and expectations for "super-cycle" earnings as AI infrastructure spending continues ‌to ramp ‌up.