iM Securities on July 6 raised its target price for LG Innotek stocks to 1.1 million won from 1 million won, a 10% increase, while maintaining a 'Buy' investment rating, despite concerns over potential iPhone price increases. Analyst Park Jeong-ha stated that the company's fundamentals remain solid, with operating profit projected to grow at an average annual rate of 43% from 665 billion won in 2025 to 1.97 trillion won in 2028, driven by upward revisions of 4.5% to 22% in 2026–2028 earnings estimates. LG Innotek stocks closed at 872,000 won in the previous trading session, down 51% from their peak, which the analyst views as a buying opportunity on further corrections given the strong growth outlook in package substrates and optical solutions.
iM Securities Raises LG Innotek Earnings Projections for 2026–2028
Park Jeong-ha of iM Securities revised upward the operating profit estimates for LG Innotek by 4.5% to 22% for the years 2026 through 2028. The target price increase to 1.1 million won reflects improved earnings prospects in both the optical solutions and package solutions segments. The analyst noted that the stock's 51% decline from its peak has priced in much of the growth expectations related to package substrates, making current levels attractive for accumulation.
Analyst Expects Limited iPhone Price Increase Impact on Shipments
Park Jeong-ha assessed that any iPhone price increase would be limited in magnitude, as the iPhone accounts for approximately half of Apple's revenue and the company is unlikely to raise prices to a degree that would damage shipment volumes. Supply chain checks conducted by iM Securities found no changes to second-half iPhone production plans, and shipment forecasts through 2028 remain at steady levels. The analyst concluded that iPhone pricing concerns are unlikely to materially affect LG Innotek's revenue trajectory.
LG Innotek Optical Solutions Operating Margin to Improve Through 2027
The optical solutions business is expected to see profitability improvements as new iPhones incorporate variable aperture technology, which increases assembly process complexity and expands LG Innotek's value-add, according to Park Jeong-ha. The analyst forecasts the optical solutions operating margin will bottom at 2.6% in 2025, then recover to 4.4% in 2026 and 4.5% in 2027. The margin expansion reflects higher technical requirements and pricing power in next-generation camera modules.
Package Solutions Business to Expand to 39% of Operating Profit by 2028
Park Jeong-ha identified package solutions as a core growth driver, citing tightening supply conditions for FC-BGA substrates amid rising demand for heterogeneous, large-area integrated circuits used in AI accelerators, CPUs, and switches for AI data centers. The analyst projects that package solutions' share of LG Innotek's operating profit will increase from 19% in 2025 to 39% by 2028, driven by sustained AI infrastructure buildout.
Q2 Earnings Forecast Exceeds Market Consensus by 26%
Park Jeong-ha estimates LG Innotek's second-quarter revenue at 5 trillion won and operating profit at 200.8 billion won, 38% above the analyst's prior estimate and 26% above market consensus. The analyst attributed the upward revision to a stronger-than-expected exchange rate and solid iPhone demand. Park stated that the Q2 earnings announcement is likely to trigger further upward revisions to second-half 2026 and post-2027 earnings forecasts.
FAQ
What did iM Securities do on July 6 regarding LG Innotek stocks?
iM Securities on July 6 raised its target price for LG Innotek stocks to 1.1 million won from 1 million won, a 10% increase, and maintained a 'Buy' rating. Analyst Park Jeong-ha cited solid fundamentals and upward earnings revisions of 4.5% to 22% for 2026–2028, projecting operating profit growth from 665 billion won in 2025 to 1.97 trillion won in 2028.
Why does the analyst expect LG Innotek's package solutions business to grow?
Park Jeong-ha stated that demand for FC-BGA substrates is tightening due to increased use of heterogeneous, large-area ICs in AI accelerators, CPUs, and switches for AI data centers. The analyst forecasts package solutions' share of operating profit will rise from 19% in 2025 to 39% by 2028.
How does iM Securities' Q2 earnings forecast for LG Innotek compare to market expectations?
Park Jeong-ha estimates Q2 revenue at 5 trillion won and operating profit at 200.8 billion won, which is 38% above the analyst's prior estimate and 26% above market consensus. The upward revision reflects a stronger exchange rate and solid iPhone demand.
