Strong Performance Drives Samsung Biologics’ Price Target Upward

Following Samsung Biologics’ announcement of its third-quarter results, several securities firms have raised their target stock price for the company. This is largely due to the rapid ramp-up of operations at Plant 4 and a favorable order environment.

As of the 24th, analysts from Korea Investment & Securities, DB Financial Investment, Shin Young Securities, SK Securities, IM Securities, Yuanta Securities, Kiwoom Securities, KB Securities, and Meritz Securities have all revised their target price for Samsung Biologics upwards. As a result, the stock target has risen from approximately 1.2 million KRW to 1.3 million KRW.

On the previous day, Samsung Biologics reported that its third-quarter consolidated sales increased by 14.8% year-over-year to 1.1871 trillion KRW (approx. $890 million), and operating profit grew by 6.3% to 338.6 billion KRW (approx. $253 million), with an operating margin of 28.5%. The company attributed the increase in sales to full-capacity production at Plants 1 through 3, along with a fast-growing utilization rate at Plant 4. Samsung Bioepis, a subsidiary, also contributed to the growth, driven by increased sales of biosimilars. A favorable exchange rate also contributed to the strong results.

In light of these positive results, Samsung Biologics raised its annual sales guidance from 10-15% to 15-20%. Samsung Bioepis also raised its guidance for sales growth from 25-30% to 40-45%, largely due to anticipated milestone payments from its Eylea biosimilar.

This earnings announcement drew extra attention due to Samsung Biologics’ recent announcement on the 22nd that it had secured a 1.7 trillion KRW contract, the largest in its history. Industry experts believe this contract involves production at the company’s under-construction Plant 5, which is slated to begin operations in April next year. If this strong order momentum continues, the construction schedule for Plant 6 may also be advanced.

However, in the short term, profitability is expected to decline in the fourth quarter, as the products initially produced at Plant 4 will be sold at higher cost rates, reflecting increased cost of goods sold and SG&A expenses.

Wi Hae-joo, an analyst at Korea Investment & Securities, noted, “Although operating profit is expected to decline in Q4 due to one-time factors, there are many reasons to raise profit expectations starting next year. Samsung Biologics will continue to be viewed as a growth stock, not a defensive one.” He raised the target price in response to the rapid ramp-up of Plant 4.

Jung Yoo-kyung, an analyst at Shin Young Securities, stated, “With the recent 1.7 trillion KRW contract from an Asia-based pharmaceutical company, we expect accelerated order intake for Plant 5. If large-scale contracts continue, we could expect the completion of Plant 5 and even visibility for Plant 6 construction next year.”

Ha Hyun-soo, an analyst at Yuanta Securities, commented, “Samsung Biologics is expanding its client base by attending industry events such as BioJapan and engaging with Japanese pharmaceutical companies. Japanese firms like Daiichi Sankyo and Chugai Pharmaceutical are collaborating with global pharma companies like AstraZeneca and Roche, so expanding business with Japanese firms could, in the long term, lead to increased contracts with global big pharma.”