[Click eStock] "NAVER, Expected Growth Rate Expansion Next Year... Target Price Raised"

On the 28th, Korea Investment & Securities raised the target price for Naver (NAVER) by 9.1% to 240,000 KRW, stating that "it is a time to increase the portfolio weight." The buy rating was also maintained.

On the same day, researcher Jeong Ho-yoon from Korea Investment & Securities said, "We have raised the 12-month forward net operating profit less adjusted taxes (NOPLAT) estimates for the search platform and commerce sectors."

Researcher Jeong noted, "The stock price was undervalued due to concerns about a declining revenue growth rate, but related worries have been gradually alleviated since last year," adding, "There are many factors improving the fundamentals, such as growth rate increases driven by monetization through artificial intelligence (AI) utilization and strengthening of commerce services next year."

He particularly highlighted the ongoing profit improvement through cost control. The growth rate of development and operation expenses (personnel costs) was 3.4%, and marketing expenses grew by 2.5%, indicating successful control over major fixed costs. Researcher Jeong explained, "Cumulative operating profit until the third quarter this year reached 1.44 trillion KRW, showing a high growth of 32.7% compared to the same period last year," adding, "Although the revenue growth rate during the same period was not high at 10.1%, operating expenses increased by only 6.0% due to cost control."

Concerns about declining advertising market share are also being largely resolved. Display advertising, which was a factor in last year's poor advertising performance, is seeing growth through strengthening app home screen content and short videos, as well as the introduction of a performance-based advertising system. The webtoon sector also increased its revenue growth rate through marketing efforts.

Researcher Jeong said, "The remaining puzzle piece is commerce. In the third quarter, NAVER's on-platform (Smart Store, Brand Store, etc.) transaction volume was approximately 9 trillion KRW, estimated to have grown 10% compared to the same period last year, outperforming market growth. However, affiliated mall transaction volume declined by 7% to 3.5 trillion KRW, showing weakness," adding, "Various measures have been announced to enhance commerce competitiveness, such as launching the AI-integrated shopping platform Naver Plus Store, and strengthening delivery services and membership benefits."