Analyst: Samsung wipeout to deepen

By

Published:

 

SEOUL — The slump in Samsung Electronics that wiped out $28 billion of market value in six weeks will deepen as Apple and Chinese rivals take market share in handsets, according to the stock's most-accurate forecaster.

Shares of Suwon, South Korea-based Samsung fell 13 percent since Nov. 29, losing more market capitalization than any other company worldwide. The stock will sink another 11 percent, said Adnaan Ahmad, an analyst at Berenberg in London whose recommendations during the past 12 months produced the best return among forecasters tracked by Bloomberg.

Samsung, the world's biggest smartphone maker, posted its first profit decline in nine quarters in the final three months of 2013 amid growing competition from Apple's iPhones and budget devices from Chinese producers.

"Selling is totally justified because the market now understands that the margin profile will change drastically," Ahmad said Jan. 7. "Samsung is in a very precarious position in the next 12 to 18 months."

Ahmad, who cut Samsung shares to sell from buy as they traded within 2 percent of a record high in March, has been out in front of a bearish shift. The average price target for Samsung shares tracked by Bloomberg has dropped about 12 percent since June, including a 4 percent decline in the past six weeks.

Most analysts still don't recommend selling. Ahmad has one of only two such ratings on the stock, among 48 buy calls and 3 holds. The consensus recommendation tracked by Bloomberg is the highest among the world's 50 largest companies by market value and Samsung's mean price target is 37 percent above its closing level of 1,295,000 won Monday.