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On Monday, Goldman Sachs revised its outlook on SK Telecom (017670:KS) (NYSE: NYSE:SKM), downgrading the company’s stock rating from Buy to Neutral and adjusting the price target to KRW57,000 from the previous KRW69,000. The decision reflects the firm’s growing concerns over the telecommunications industry’s profitability and SK Telecom’s focus on artificial intelligence (AI) initiatives, which analysts believe could constrain the company’s ability to enhance shareholder returns.
In the fourth quarter of 2024 earnings call, SK Telecom indicated that while it aims to keep shareholder returns stable, it plans to reinvest earnings from operational improvements predominantly into growth areas such as AI. Goldman Sachs, which had previously been optimistic about SK Telecom due to its leading position in a favorable telecommunications industry, is now adopting a more cautious stance on the sector as a whole.
The firm’s analysts are waiting for evidence of significant improvements in profitability and their translation into better shareholder returns before considering a more positive rating. Since being added to Goldman Sachs’ Buy List on August 20, 2020, SK Telecom’s shares have seen a 43% increase, outperforming the KOSPI’s 15% rise as of the market close on February 27, 2025. The downgrade comes as Goldman Sachs reassesses the potential for SK Telecom amid industry-wide shifts and the company’s strategic investments.
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