TLDR
- SK Hynix stock fell 5.2% to $188.30 after a broad selloff in memory and high-beta tech stocks driven by rising oil prices and inflation fears.
- JPMorgan initiated coverage with an Overweight rating and a $245 price target on the same day as the drop.
- JPMorgan projects a 34% EPS compound annual growth rate over the next two years and a total shareholder return yield of nearly 42% from 2026 to 2028.
- The analyst consensus remains “Buy” with an average price target of $247.67 across 14 analysts.
- SK Hynix reported quarterly EPS of $8.48 on revenue of $51.19 billion, with a debt-to-equity ratio of just 0.06.
SK Hynix (SKHY) dropped 5.2% on Thursday, falling to $188.30 from a prior close of $198.63, just shy of its 52-week high of $199.87. The move came as rising oil prices sparked inflation and interest rate fears, pulling memory chip stocks broadly lower alongside Micron and SanDisk.
The selloff hit on the same day JPMorgan initiated coverage with an Overweight rating and a $245 price target, set for June 2027. That initiation did little to stop the bleeding, as broader macro concerns took over.
JPMorgan’s price target is based on a 20% ADR premium to the local share price and represents seven times the average EPS for fiscal years 2026 to 2027. The firm expects SK Hynix to post a 34% EPS compound annual growth rate over the next two years.
Trading volume came in at 21.5 million, down 31% from the average daily volume of 31.4 million, suggesting some investors sat on the sidelines rather than rushed to sell.
The stock trades at a P/E ratio of 7.09 on a trailing basis, though the market cap weighted figure sits at 21.50. JPMorgan flagged the low earnings multiple despite gross profit margins of 76% as a key part of the bull case.
Analyst Backing Remains Strong
The broader analyst community has not backed away. The average price target across 14 analysts sits at $247.67, with four Strong Buy ratings, nine Buy ratings, and one Hold. No sell ratings are on record.
Citigroup upgraded SK Hynix to Strong Buy on September 2. Cantor Fitzgerald and Stifel Nicolaus both started coverage in early August with Overweight and Buy ratings respectively, setting targets of $300 and $240. Royal Bank of Canada started with an Outperform and a $200 target. UBS set a $204 target with a Buy rating in late July. Barclays holds an Overweight with a $300 target.
What JPMorgan Is Betting On
JPMorgan expects AI-driven demand for high-bandwidth memory to fuel an upturn cycle lasting more than five years. The firm sees memory average selling prices trending upward from Q1 2024 through Q4 2028 and beyond.
SK Hynix has locked in more than 50% of its capacity through long-term agreements. Management has also committed to returning over 50% of free cash flow to shareholders. JPMorgan projects a total shareholder return yield of nearly 42% from 2026 to 2028.
Needham also raised its price target to $220, maintaining a Buy rating, after SK Hynix’s board approved a share buyback plan valued at 40 trillion Korean won.
The most recent quarterly results showed EPS of $8.48 on revenue of $51.19 billion. Analysts expect full-year EPS of $25.48. The balance sheet shows a debt-to-equity ratio of 0.06 and a current ratio of 2.59.
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