Morningstar: SK Hynix ADR valuation is reasonable

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Morningstar said in a report that, given long-term cyclical risks, the valuation of SK Hynix’s American depositary receipts (ADRs) looks reasonable. Analyst Jing Jie Yu expects the earnings trend for the memory chip maker to be “extremely difficult to predict,” and believes the “volatile” pattern in SK Hynix’s ADRs and Korean stocks will persist. He added that, for SK Hynix, retail participation and the size of margin trading targeting the stock have reached unprecedented levels, further intensifying share price volatility. However, he also said, “In light of the lack of sufficient trading history to determine a reasonable bid-ask spread, we expect SK Hynix’s ADRs to continue the price discovery process in the near term.” Morningstar maintained its fair value estimate of $160 and reaffirmed its “high” uncertainty rating.
SK Hynix-0.32%
SKHY-1.64%
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