Sk Telecom (SKM – Research Report), the Communication Services sector company, was revisited by a Wall Street analyst today. Analyst Sun Jung Lee from Bank of America Securities reiterated a Hold rating on the stock and has a $25.08 price target.
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Sun Jung Lee has given his Hold rating due to a combination of factors impacting SK Telecom. The company’s operating profit for the first quarter was in line with expectations, showing year-over-year growth primarily due to reduced marketing and depreciation costs. However, a recent data breach has led to an increase in mobile number portability, which is expected to incur additional customer-retention costs and potential financial impacts, including costs for USIM replacements and possible regulatory fines.
Looking ahead, while SK Telecom is projected to achieve a modest operating profit increase by 2025, the potential for shareholder return growth appears limited. This is attributed to flat earnings per share growth and a capital allocation strategy focused on deleveraging and investments in AI and equity acquisition. Consequently, despite an undemanding valuation and a competitive dividend yield, the upside potential for shareholder returns is capped, justifying the Hold rating.
According to TipRanks, Jung Lee is ranked #3886 out of 9511 analysts.