Citi Maintains Buy Rating on Samsung Electronics, Expects Upside Over 60%

Citi's short-term optimism for Samsung Electronics is heating up.

Citi's latest research report maintains a Buy rating on Samsung Electronics (005930.KS), while also adding a 90-day "catalyst watch" for upside with a validity period until August 10, 2026. The target price remains at 460,000 KRW, which corresponds to an expected total return of approximately 61.7% compared to the stock price of 285,500 KRW at the time of the report's release.

This upgrade is not due to a sudden change in long-term logic, but is based on a more direct judgment: there is a continuous and significant earnings upside for Samsung's semiconductor business in the second half of 2026.

Three Short-Term Catalysts

Citi has identified three catalysts to watch in the near term: accelerated growth in token usage following AI model optimization; increased adoption of SoCAMM2, a new memory module for NVIDIA's next-generation Vera Rubin AI chip; and an expected sequential increase of 30% in HBM prices in the fourth quarter of 2026.

On the pricing front, Citi expects global average selling prices for DRAM and NAND to see significant year-on-year increases of about 200% and 186%, respectively, in 2026, providing a solid foundation for the continued release of Samsung's profit elasticity.

Investment Logic: Dual Benefits from Memory and Foundry Lines

The report's long-term logic is built on the semiconductor industry's structural trend from "single-chip" to the integration of logic chips and memory chips, with Samsung possessing technological advantages at both the memory and foundry ends.

In terms of foundry operations, Citi is positive about the revenue increase brought by 3D architecture and custom chip orders. In addition, Samsung's abundant cash reserves and free cash flows also provide room for enhancing capital returns in the future.

Valuation: SOTP Sum-of-the-Parts Approach, Profits to Soar in 2026

Citi uses the SOTP (sum-of-the-parts) method to calculate the target price of 460,000 KRW based on the expected EBITDA for 2026.

The earnings forecast shows a significant jump in net profit and earnings per share in 2026, with continued growth in 2027 and 2028 but at a noticeably slower pace, corresponding to a rapid compression of valuation multiples as profits rise.

Main Risks

Citi also lists the core risks under the bullish premise: delays in HBM customer approval processes, weaker-than-expected PC and NAND demand, competitors increasing capital expenditures to lower prices, intensified smartphone market competition, and exchange rate pressures due to the appreciation of the Korean won.

These risks point to the same core - the bull logic of this report is essentially based on the assumption that the prosperity of HBM, DRAM, and NAND continues to be restored.