Shares of Japanese semiconductor giant Kioxia Holdings have experienced a significant decline recently, falling by more than half from the all-time high reached in June. However, the majority of analysts maintain a bullish outlook, with their average price target sitting approximately 130% above the current share price.
The stock closed at 52,110 yen on July 17th, marking a 50% drop from its record high of 112,700 yen set on June 22nd. This plunge caused its market capitalization ranking in Japan to fall from first place to fourth. The broader market also faced pressure that day, with the Nikkei 225 index tumbling 4%, recording its fifth-largest single-day decline in history, and the semiconductor sector underperforming across the board.
Several overlapping factors have contributed to this downturn. Market concerns are growing over the sustainability of capital expenditure in the artificial intelligence sector. There is also a heightened expectation that production expansions by competitors could drive down memory chip prices. Furthermore, technical selling pressure has emerged due to spillover selling from leveraged single-stock exchange-traded funds in South Korea. Additionally, some investors view the complete divestment of shares by major shareholder Bain Capital as a cautionary signal.
Despite the sharp share price correction, analysts' confidence in Kioxia's fundamental business strength remains unshaken. According to data, the average analyst price target for the stock is 121,959 yen, which is about 130% higher than the current trading level. This gap represents the largest upside potential among the top 100 companies by market value on the Tokyo Stock Exchange. Kazuyoshi Saito, a senior analyst at IwaiCosmo Securities, maintains a target price of 132,000 yen, stating that "the fundamentals have not changed at all," and that the company's "strong earnings and growth logic supported by AI demand remain solid." Last week, Nomura Securities raised its target price from 115,000 yen to 126,000 yen, citing expectations for continued improvement in NAND flash memory supply and demand dynamics and the potential for price increases.
Nevertheless, some perspectives caution that a recovery may not be immediate. Ikuo Mitsui, a fund manager at Aizawa Securities, noted that disruptions from factors such as fund flows related to South Korean ETFs suggest that Kioxia may not regain upward momentum until at least the end of August.
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