LG Electronics target prices soar after investors cut losses on 'chronically undervalued' stock

"I'll never buy LG Electronics again — I cut my losses." (LG investor)

"Should I buy LG Electronics now?" (investor)

Target prices for LG Electronics — long regarded as a chronically undervalued stock — have surged. Shinhan Securities raised its target price for the company by 61 percent, from 180,000 won ($132) to 290,000 won, in a report titled "Things change from here." Kyobo Securities set an even higher target of 350,000 won.

LG Electronics shares, which had plunged more than 70 percent from a peak of around 460,000 won to the 150,000 won range, have since recovered to the 200,000 won level. As of Friday, the share price stood at 215,500 won.

The stock had surged on what investors called the "Jensen Huang effect" before collapsing just as quickly, prompting a wave of investors to cut their losses. But with brokerages sharply raising their target prices and the share price reversing course, expectations of further gains are building again.

Comments such as "Should I buy LG Electronics now?" and "I sold at a loss and now the price is going up" have begun circulating among investors, signaling renewed interest in the stock.

Oh Gang-ho, a research analyst at Shinhan Securities, called LG Electronics "the standout IT company to watch as it enters the AI value chain," adding that the company is poised to shed its image as a perpetually undervalued home-appliance maker and achieve a valuation re-rating through its expansion into robotics and heating, ventilation and air conditioning.

Shinhan Securities forecast LG Electronics' third-quarter sales at 24.1 trillion won ($17.7 billion), up 10 percent from a year earlier, with operating profit rising 45 percent to 1 trillion won.

"Excluding the drag from consolidated subsidiaries, the core business divisions retain solid growth momentum," Oh said. "With full-scale entry into the AI-driven HVAC market in 2007, accelerating progress in the robotics business, and stable growth expected from existing divisions such as home appliances and automotive components, we view the company as a leading IT name to watch as it enters the AI value chain."

Morgan Stanley also weighed in, writing in a report titled "LG trio: entering a new growth phase" that "the next wave of AI beneficiaries is set to expand beyond semiconductors into intelligent hardware," and that LG Electronics and LG Innotek are well positioned in that space. The investment bank added that LG Energy Solution's batteries for robotics and LG CNS's smart-factory and AI capabilities are converging to make LG Group as a whole "a single physical AI stack bringing AI into the real world."