[Alpha Biz= Paul Lee] NH Investment & Securities raised its target price for Kakao from KRW 49,000 to KRW 53,000, maintaining a "Buy" rating, citing expectations of a turnaround in the company’s performance this year.
The firm stated, "We have adjusted the target price to reflect the updated earnings estimates for 2025 and the recent stock price increases of Kakao’s listed subsidiaries. Kakao is expected to see significant changes, including increased traffic, the introduction of a subscription model, and AI integration across services, following its platform revamp and strategic partnership with OpenAI. Additionally, the improved performance of its subsidiaries is expected to drive a turnaround in operating profit by 2025."
NH Investment & Securities forecasts Kakao’s 2024 operating profit to reach KRW 602.1 billion, marking a 30.8% year-on-year increase. Analyst Ahn commented, "Key factors contributing to the subsidiaries' improved performance include Kakao Pay’s transition to profitability, SM Entertainment’s earnings growth, the consolidation of DearU, and Kakao Entertainment’s recovery."
The report also highlighted Kakao’s partnership with OpenAI as a key AI-driven momentum booster. Last month, Kakao announced a strategic alliance with OpenAI, signaling potential AI-related innovations in its services.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
