Citi Cuts Hyundai Motor Price Target on Stronger Won, Rising Costs

Citi has reduced its price target on Hyundai Motor Company (KRX:005380) to KRW 455,000 from a previous KRW 559,000, reflecting concerns over currency headwinds and rising expenses. The investment bank also trimmed its net profit estimates for the automaker for fiscal years 2026 through 2028 by 6-10%.

Valuation Adjustments

In its analysis, Citi lowered the price-to-earnings (P/E) multiple it applies to Hyundai's core operations to approximately 10 times, down from 12 times. The firm attributed this reduction to a "prolonged challenging operating environment."

Citi also shifted its valuation base year forward to 2027 from 2026. This combination of a lower multiple and revised earnings forecasts led to the significant cut in the stock's price target.

Operational Factors and Outlook

Hyundai recently faced a production disruption of approximately 60,000 to 70,000 units during the third quarter of 2026 due to a labor union strike. However, the company noted a limited impact on labor cost inflation, as the strike was primarily focused on extending the retirement age rather than on salary increases.

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Looking ahead, Hyundai expects sales volume to improve starting in the fourth quarter of 2026. This anticipated growth is driven by the launch of new models, including full redesigns for the high-volume Tucson and Avante, which globally generate 600,000-700,000 and 400,000 units in annual volume, respectively.

EV Strategy and Potential EU Tailwinds

The automaker is also advancing its electric vehicle strategy, planning to launch its first extended-range electric vehicle (EREV) models in the United States in the first half of 2027, including the Santa Fe EREV and GV70 EREV.

Furthermore, Hyundai anticipates that the European Union’s proposed Industrial Accelerator Act could ease competition from Chinese manufacturers. The regulation, discussed for implementation from late 2027 or early 2028, would require EVs sold in the EU to be assembled in the region and meet local content requirements for parts and battery materials.