SK Hynix Inc (NASDAQ:SKHY) has received an ‘Outperform’ rating from Wedbush on Tuesday as the firm initiated coverage with a KRW2.56 million price target, citing a tight memory supply environment, the company’s technology position and an attractive valuation.
The company’s Nasdaq-listed shares were up nearly 6% at about $151 on Tuesday, while its Korea shares traded at about KRW1.57 million.
Wedbush wrote that it remains bullish on memory stocks, arguing that vendor forecasts could continue to rise until substantial new production capacity comes online.
The firm highlighted the severity of the current supply shortage, noting that server vendors are reducing product specifications because of limited availability while there have been no apparent meaningful customer inventory builds despite the length of the current upcycle.
The analysts also pointed to constraints on new capacity, with a lack of available clean-room space creating multi-year lead times for additional fabs. The firm believes capacity additions before 2028 will necessarily be modest and wrote that it remains unclear when new facilities will ultimately provide enough supply to meet accelerating demand.
On technology, Wedbush highlighted SK Hynix’s sustained leadership in high-bandwidth memory shipments, its early introduction of 1c-based designs and its leading position in the QLC market as signs of a strong, if not leading, competitive position.
Valuation was another key part of the investment case. Wedbush’s KRW2.56 million price target implies more than 50% appreciation potential for the Korean-listed shares and more than 20% for the company’s American depositary receipt.
The target is based on an approximately 5-times multiple of Wedbush’s 2027 estimated earnings per share of KRW491,915, plus KRW97,433 per share in net cash as of the second quarter of 2026.
Wedbush wrote that while memory stocks have historically traded at mid-single-digit multiples, it views that valuation level as a historic base for peak-cycle earnings. The firm believes the current cycle could differ because earnings estimates are still rising, the peak period could be extended and new supply agreements could support stronger cash flows beyond the peak.
Wedbush also highlighted potential value from SK Hynix’s investments in other memory assets that are not reflected in its valuation. The firm estimates that Solidigm could be worth roughly 20% of SK Hynix’s market capitalization if valued at Sandisk’s enterprise-value-to-sales multiple, compared with an implied valuation of about 10% within SK Hynix.
The firm also estimates SK Hynix could own about 30% of Kioxia through convertible debt and equity. Wedbush believes that stake represents roughly another 10% of unaccounted-for value, with additional potential upside if Kioxia benefits from pursuing a U.S. listing.