Tech giant Samsung Electronics likely saw January-March earnings slip for the sixth straight quarter, but investors are betting on a rebound this year on healthy chip sales and high hopes for its new flagship smartphones.
Shares in South Korea-based Samsung hit a more-than 21 month high in mid-March as brokerages raised profit forecasts and target prices on its improving business outlook. The stock rose 8.6 percent in January-March following a 12.1 percent gain in the previous period.
Investors believe the Galaxy S6 and its curved-edges variant will sell briskly when they roll out this month following positive reviews, and analysts say new mid-tier phones will boost sales, adding to expectations that the earnings slide in its handset business is ending.
The recovery is also expected to be backed by strong semiconductor sales. In addition to healthy memory chip demand, Samsung's system chips business is seen returning to profit this year. Its home-grown Exynos processor will power the new Galaxy phones, and Samsung recently added Nvidia Corp as a contract manufacturing client.