South Korean securities firms have lowered target prices for major entertainment stocks after shares of HYBE, JYP Entertainment, SM Entertainment, and YG Entertainment declined 39-50% this year. DS Investment Securities, SK Securities, Shinhan Investment Securities, and Meritz Securities reduced their targets to reflect industry-wide valuation adjustments and weakened investor sentiment. The downgrades contrast with KOSPI's 61.31% gain over the same period. Analysts attributed the declines to activity gaps from key artists and high baseline comparisons from prior periods. Securities firms maintain that second-half artist comebacks and world tours could reverse the trend, citing scheduled activities from BTS, BIGBANG, Stray Kids, and TWICE as potential catalysts for revenue growth.
Entertainment Stocks Record Sharp Declines Against Market Gains
HYBE shares fell 39.52% this year, according to securities industry data. JYP Entertainment declined 39.74%, YG Entertainment dropped 45.53%, and SM Entertainment recorded a 50.37% decrease. The declines exceeded the KOSDAQ index's 18.84% fall and contrasted sharply with KOSPI's 61.31% rise during the same period.
Securities Firms Lower Target Prices Across Major Entertainment Companies
Analysts reduced valuation multiples and adjusted earnings forecasts across the entertainment sector in response to the stock performance and shifting market conditions.
HYBE Target Reduced to 350,000 Won
DS Investment Securities lowered HYBE's target price from 450,000 won to 350,000 won, applying a multiple of 40 times versus the previous 50 times. The firm maintained its top pick status for HYBE within the entertainment sector, citing BTS's world tour, merchandise sales, Weverse growth, and fanbase expansion for new groups KATSEYE and a group referenced as Cortis. The firm projected HYBE's consolidated revenue at 4.235 trillion won and operating profit at 240.1 billion won, representing year-over-year increases of 59.8% and 387.0% respectively. DS Investment stated that BTS's activity resumption would drive the steepest profit improvement in the sector.
JYP Entertainment Target Cut to 75,000 Won
SK Securities reduced JYP Entertainment's target price from 92,000 won to 75,000 won. The adjustment reflected delayed recognition of additional revenue from TWICE's North American tour and Stray Kids fan meeting online merchandise sales, now expected in the second half, alongside sector-wide valuation corrections. SK Securities noted that Stray Kids' comeback and world tour are scheduled for the second half, which would increase concert and merchandise revenue. The firm also cited TWICE's global tour and urban pop-up store strategy as performance drivers. SK Securities stated that the current stock price sits at the historical low range based on 12-month forward price-to-earnings ratio, indicating increased valuation attractiveness.
SM Entertainment Target Lowered to 110,000 Won
Shinhan Investment Securities cut SM Entertainment's target from 130,000 won to 110,000 won, while DS Investment Securities reduced its target from 170,000 won to 110,000 won. The reductions incorporated the possibility of fewer second-half activities compared to the first half and declining sector multiples. Analysts assessed that growth momentum remains solid for junior artists including aespa, RIIZE, and NCT WISH. Shinhan Investment projected SM would record its highest-ever revenue and operating profit exceeding market expectations in the second quarter. The firm identified a new boy group scheduled to debut in the second half as a variable that could lead to future corporate value reassessment.
YG Entertainment Target Drops to 60,000 Won
Meritz Securities lowered YG Entertainment's target price from 80,000 won to 65,000 won, and iM Securities reduced its target from 85,000 won to 60,000 won. The adjustments reflected sector-wide valuation corrections, increased content production costs, and downward revisions to near-term earnings estimates. Analysts stated that BIGBANG's world tour, the group's first in approximately 10 years, along with expanded activities from BABYMONSTER and TREASURE, would be reflected in second-half performance. BIGBANG's world tour schedule currently includes over 30 dates with an audience exceeding 1 million people. Analysts expect concurrent growth in concert revenue, music streaming, album sales, merchandise, and licensing. A new boy group debut scheduled for year-end was evaluated as a variable that would enhance mid-to-long-term growth potential.
Analysts Project Second-Half Recovery from Artist Activities
Securities firms characterized the target price reductions as a valuation normalization process rather than signals of industry deterioration. Samsung Securities researcher Choi Min-ha stated, "While the first-half stock performance of entertainment companies was disappointing, industry results have steadily expanded. With all four entertainment companies set to launch new groups in the second half, attention should be paid to their initial performance." Analysts noted that activity gaps from some artists and high baseline burdens pressured stock prices in the first half, but second-half comebacks from major intellectual properties and world tours could lift earnings.
FAQ
Why did Korean entertainment stocks decline more than the broader market this year?
Major entertainment stocks fell 39-50% while KOSPI rose 61.31% due to activity gaps from key artists, high baseline comparisons from prior periods, and sector-wide valuation adjustments by securities firms.
What artist activities are scheduled for the second half that could affect entertainment stock performance?
BTS's world tour, BIGBANG's first world tour in approximately 10 years with over 30 dates and 1 million attendees, Stray Kids' comeback and world tour, TWICE's global tour, and new group debuts from all four major entertainment companies are scheduled for the second half.
