[THE INVESTOR] Tech giant Samsung Electronics ’ robust first-quarter earnings and latest management decisions have prompted global investment firms to raise the target price of the tech firm’s share to around 3 million won (US$2,643).

After Samsung announced on April 27 that it had decided not to set up a holding company and would cancel some of its own shares, global investment firm Nomura Securities raised its stock target price to a record 3.3 million won, citing that the tech giant has shown it can eliminate nagging governance issues. 

“Samsung’s latest decision will likely get rid of some troublesome corporate governance structure issues, which have undermined the stock value so far,” said Chung Chang-won, an analyst at Nomura Securities.

“The tech firm now deserves global valuation standards that are applied to its competitors in the same industry segment.”

Brokerages JP Morgan and BNP Paribas raised their target prices to 3 million won and 3.1 million won, respectively, while Morgan Stanley and Deutsche Bank each pushed up their target price to 2.6 million won and 2.94 million won.

Most major domestic investment firms, including NH Investment & Securities, and Mirae Asset Daewoo, also painted a rosy picture, putting the target price in the high-2 million won range. Yuanta Securities forecast that the shares would cross 3 million won.

Announcing its first-quarter earnings on April 27, Samsung said it decided against establishing a holding company as there were few benefits involved. Some of the company’s shareholders, including US activist fund Elliott Management, last year demanded the Korean tech giant to create a holding company, which they said would help solve issues related to its complex governance structure to enhance shareholder value. Samsung also announced that it plans to cancel its own treasury shares, worth 40 trillion won, in two phases until 2018.

Samsung’s stock price, which has been on an upward trend since April 21, reached an all-time high of 2.29 million won on April 28.

By Kim Young-won (wone0102@heraldcorp.com)