SK Hynix ADRs Rise as Brokerages Initiate Coverage With Bullish Outlook

American Depositary Receipts (ADRs) of South Korean chipmaker SK Hynix jumped on Tuesday after at least six brokerages initiated coverage with bullish ratings, citing the company's dominant position in the high-bandwidth memory (HBM) market fueled by the artificial intelligence boom.

Market Reaction and Analyst Ratings

The company's U.S.-listed shares rose 5% to $150.08 in Tuesday's trading. The positive sentiment follows SK Hynix's secondary listing on July 10, which raised approximately $26.5 billion and was intended to provide access to a broader base of global investors.

According to a Reuters report, the new analyst coverage includes:

• BofA Global Research, which started the stock with a "buy"-equivalent rating.
• Rosenblatt Securities, which set the highest price target among the group at $320 per share.

Despite the day's gains, the shares have pulled back since their debut last month amid a wider downturn in semiconductor stocks.

The Bull Case for AI Memory

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Analysts are optimistic about SK Hynix's strategic position as a key supplier of HBM chips, which are essential components for training and running AI models. Massive infrastructure spending by technology companies has sharply increased demand and prices for these advanced memory products.

"We believe the U.S. listing provides an opportunity for SKHY shares to re-rate closer to its U.S.-based rival (Micron)," analysts at William Blair noted, highlighting the company's "strong tie-in to AI and data center end markets." BofA also stated that SK Hynix remains undervalued, pointing to strong orders and the potential for "super-cycle" earnings as AI investment continues.

Recent Earnings in Focus

This wave of positive analyst ratings contrasts with the company's most recent earnings report, issued shortly after its U.S. listing. While SK Hynix posted a record quarterly profit, the results fell short of analyst forecasts.

The miss was attributed to delays in shipments of some advanced memory products, which raised investor concerns about the near-term pace of AI-related spending. Bank of America, which was an underwriter for the offering along with Citigroup, Goldman Sachs, and J.P. Morgan, remains confident in the chipmaker's long-term outlook.