(Bloomberg) — Shares of SK Hynix Inc. plunged, leading peers lower, after Morgan Stanley cut its rating on the Korean memory chipmaker two notches on its fading pricing power.
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The stock dropped as much as 10% to the lowest level since Feb. 19. Among other Seoul-listed semiconductor shares, Hanmi Semiconductor Co. fell as much as 7.5% and Samsung Electronics Co. declined 3.1%.
Morgan Stanley downgraded SK Hynix to underweight from overweight and slashed its price target to 120,000 won from 260,000 won. The brokerage said the stock is now its least preferred among global memory makers.
“We prefer moving up to quality in Samsung and value-oriented end markets,” analysts Shawn Kim and Duan Liu wrote in a note. “Memory conditions are beginning to deteriorate. It will get tougher for revenue growth and margins from here as we move past late-cycle conditions.”
SK Hynix shares surged to 24-year high earlier this year amid excitement over its supply deal with artificial intelligence leader Nvidia Corp. Despite dropping in the past couple of months the stock is still up about 4% so far this year compared with a loss of 20% for Samsung.
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