Nucor earnings beat by $0.08, revenue fell short of estimates
Monday saw Nomura/Instinet adjust its stance on KT Corp (030200:KS) (NYSE: NYSE:KT), downgrading the stock from Buy to Neutral while simultaneously increasing the price target from KRW53,000 to KRW56,000. The decision by Nomura’s analysts comes as a response to KT Corp’s sustained earnings momentum and enhanced operational efficiency, which have been reflected in the company’s performance over recent years. According to InvestingPro data, KT Corp currently trades at an EV/EBITDA multiple of 3.97x and a price-to-book ratio of 0.76, with analysis suggesting the stock may be undervalued at current levels.
KT Corp has been recognized for successfully implementing structural reforms, which include labor restructuring, monetizing real estate assets, and streamlining its business portfolio. These strategic moves have led to improved margins and more predictable earnings. The company’s strong performance is reflected in InvestingPro metrics, showing impressive returns of 53.19% over the past year and 27.35% over the last six months, while maintaining dividend payments for 11 consecutive years. However, despite these advancements and a notable 62% rally in KT Corp’s share price over the past two years, outperforming the KOSPI’s 4% increase, Nomura believes that the current stock valuation now adequately captures these positive developments.
The analysts noted that foreign ownership of KT Corp has reached the 49% regulatory ceiling, suggesting limited room for additional foreign investment at this time. Nomura’s revised outlook hinges on the potential reappointment of CEO Kim, whose leadership has been pivotal in maintaining cost discipline through measures such as maintaining a lean labor force and liquidating non-core assets. A continuation of Kim’s policies could prompt Nomura to reassess their position on KT Corp’s stock.
Nomura has shifted its preference to LG Uplus (KS:032640), citing its more apparent earnings turnaround and potential for improved shareholder returns through actions like treasury share buybacks and cancellations. The key risks identified by Nomura include the possibility of higher-than-anticipated dividends per share for 2025, which they have assumed to be KRW2,400, and the potential for regulatory pressure to cut tariffs. For investors seeking deeper insights, InvestingPro offers comprehensive analysis with 8 additional ProTips and a detailed Pro Research Report, providing valuable context about KT Corp’s financial health score of GOOD (2.61) and its position in the telecommunications sector.
In other recent news, KT Corp has received notable attention from financial analysts with positive evaluations of its strategic initiatives and growth prospects. Goldman Sachs has upgraded KT Corp’s stock from Neutral to Buy, raising the price target to KRW 59,000. This decision is based on KT Corp’s effective management of non-telecommunications assets and its commitment to enhancing shareholder returns. The firm is also expected to generate significant revenue from its real estate development project in Gwangjin-gu, which will support a substantial treasury buyback program. Additionally, UBS has initiated coverage on KT Corp with a Buy rating and a KRW 55,000 price target. UBS projects a leading operating profit growth rate from 2024 to 2026, driven by advancements in the AI business and cost-saving measures. Despite potential regulatory risks, UBS anticipates stable revenue growth in KT Corp’s telecom business. Both firms express confidence in KT Corp’s ability to optimize its asset portfolio and maintain strong shareholder value.
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