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Investing.com - JPMorgan downgraded NCsoft Corp (KS:036570) from Neutral to Underweight on Wednesday, while raising its price target slightly to KRW160,000 from KRW150,000, suggesting 28% downside potential.
The downgrade follows a 57% rally in NCsoft’s share price since April, which JPMorgan believes has "overshot the fundamentals" compared to the broader KOSPI’s 26% gain during the same period. The firm cited concerns that market expectations for the upcoming Aion 2 game have been substantially raised and are now fully priced into the stock.
JPMorgan expressed skepticism about NCsoft’s 2026 revenue guidance of KRW2.0-2.5 trillion, pointing to projected declines in revenue from existing Lineage IP mobile games and the company’s "weak track record on new game execution." The firm also noted concerns about cost control, as labor costs declined only KRW13 billion (3%) year-over-year in the first half of 2025 despite an 800-person headcount reduction in the fourth quarter of 2024.
The investment bank considers NCsoft’s valuation "demanding" at 19x and 23x price-to-earnings ratios for 2026 and 2027, respectively, based on JPMorgan’s estimates, which are 9% below consensus for 2026 operating profit. The firm also highlighted a "lack of major pipeline" following Aion 2’s expected launch in the fourth quarter of 2025.
JPMorgan’s new price target of KRW160,000 is based on a 16.5x price-to-earnings multiple for 2027, representing a 20% discount to global peers, with the firm identifying "potentially better new game execution in 2026" as a key risk to its Underweight rating.
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