LG Electronics (066570.KS): 1Q26 Preliminary Operating Profit Beat on Improved TV and Vehicle Component Businesses; Neutral
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
Goldman Sachs maintained its Neutral rating on LG Electronics (LGE) while raising the 12-month target price from W94,000 to W107,000. This revision follows LGE's robust first-quarter 2026 preliminary earnings guidance released on April 7, which highlighted operating profit of W1.7 trillion, comfortably exceeding both Goldman Sachs' W1.4 trillion estimate and the Bloomberg consensus of W1.6 trillion.
The earnings beat was primarily driven by stronger-than-expected profitability in the Media and Entertainment Solutions (MS) and Vehicle Solutions (VS) divisions. The MS division benefited from inventory adjustments boosting new TV and PC sales, alongside lower labor costs from prior voluntary retirements, pushing its operating margin to a high-single-digit percentage. Meanwhile, the VS division achieved its highest operating margin since 2015 due to accelerated project realization, improved product mix, and enhanced cost efficiency. These positive contributions offset weakness in the Eco Solutions (ES) division, which suffered from soft air conditioner demand and declining average selling prices.
Goldman Sachs revised its 2026, 2027, and 2028 earnings per share estimates upward by 26%, 15%, and 15%, respectively, incorporating the latest valuation of LG Electronics India. With the stock closing at W107,100, the updated target price implies minimal upside, justifying the maintained Neutral stance. Segment details will be disclosed during the April 29 earnings call.