[Click eStock] "Naver, Earnings Forecast Downgraded... Target Price ↓"

Prolonged Economic Slump... Delay in Advertising Business Recovery

SK Securities forecasted on the 5th that NAVER's second-quarter earnings would fall short of expectations. Accordingly, they maintained a 'Buy' investment rating but lowered the target price to 240,000 KRW.

Nam Hyoji, a researcher at SK Securities, stated, "We expect sales to increase by 11.2% year-on-year to 2.68 trillion KRW, operating profit to rise by 11.4% to 415 billion KRW, and net profit to grow by 3.9% to 298 billion KRW," adding, "Operating profit is expected to slightly miss the consensus."

Researcher Nam explained, "Following the listing of Webtoon Entertainment, we applied a 40% discount to the average market capitalization after listing, adjusting the equity value to 1.5 trillion KRW (previously 4.1 trillion KRW). Additionally, reflecting the decline in LY Corp.'s stock price, we adjusted the equity value to 4.8 trillion KRW (previously 5.9 trillion KRW)."

Nam pointed out, "With the prolonged economic downturn, the recovery of the company's core advertising business is delayed, and commerce is facing challenges such as the entry of Chinese and short-form platforms into the domestic e-commerce market and intensified promotional competition, making it difficult to expect high transaction growth."

However, excluding one-time costs related to webtoons this quarter, profits have continued to improve compared to the previous quarter since the first quarter of last year. Researcher Nam added, "Additional downside risks are limited. However, for the stock price trend to change, a strong catalyst that can instill confidence in future revenue growth is necessary."