Hyundai Motor shares slide from 750,000 to 324,500 won — and analysts say the bottom may not be in yet

South Korean brokerages are cutting their target prices for Hyundai Motor in rapid succession, citing expectations that third-quarter earnings will miss market forecasts due to strike-related production disruptions and mounting cost pressures. Some analysts also see room for an earnings rebound from the fourth quarter, driven by a production recovery and new-model launches.

Hyundai Motor shares closed Thursday down 3.42 percent at 324,500 won ($242), according to Korea Exchange data. The stock has shed 36.12 percent over the past six months and 29.84 percent over the past three months.

The shares had hit a year-to-date high of 750,000 won in June, lifted by enthusiasm over physical AI, before entering a sustained decline. The downward pressure has intensified recently as brokerages lower their targets in response to a dimming third-quarter earnings outlook.

Hanwha Investment & Securities cut its target price Thursday to 670,000 won from 760,000 won. Heungkuk Securities lowered its target to 550,000 won from 720,000 won. NH Investment & Securities and Shinyoung Securities set their targets at 570,000 won and 540,000 won, respectively.

The target-price cuts reflect a downward revision to third-quarter earnings estimates. Hanwha Investment & Securities forecast Hyundai Motor's third-quarter operating profit at 2.4 trillion won ($1.79 billion), down 5.4 percent from a year earlier — below the market consensus of 3 trillion won. Global wholesale vehicle sales in the third quarter came in at 920,000 units, down 11 percent year on year.

Analysts say third-quarter results were weighed down by a triple burden of volume, exchange rates and costs. "Third-quarter profitability was unavoidably hit by higher raw-material input costs stemming from price increases in April and May, as well as an unfavorable sales mix from weaker eco-friendly vehicle demand," said Kim Seong-rae, an analyst at Hanwha Investment & Securities.

Strike-related production disruptions also hurt results. Strikes in July and August caused a production shortfall of roughly 55,000 vehicles, according to Hanwha Investment & Securities. Sales of hybrid electric vehicles, which had been driving volume and margin improvement, were also disrupted.

"Union strikes forced the shutdown of some factories, resulting in a production loss of about 55,000 vehicles, while the number of working days also fell due to the Chuseok holiday," said Ha Neul, an analyst at NH Investment & Securities. "As the rise in raw-material prices from the first half begins to feed through into manufacturing costs, profitability pressure is expected to intensify."

Brokerages are now focused on a production recovery and new-model effects in the fourth quarter. "With expanded production of the new Tucson and Avante and a broader Genesis hybrid lineup, utilization rates at key plants — led by domestic factories and followed by facilities in Turkey and the Czech Republic — should improve in the fourth quarter," said Moon Yong-kwon, an analyst at Shinyoung Securities.

A stronger won poses a risk to any earnings recovery. "If the current exchange rate of 1,357 won per dollar — as of end of the third quarter — persists, it would represent a sharp drop from the third-quarter average of 1,418 won," said Kim Chang-ho, an analyst at Korea Investment & Securities. "The probability is rising that this will act as a factor limiting the earnings recovery in the fourth quarter as well."