iM Securities cuts HYBE target price to 290,000 won, but holds buy rating

iM Securities lowered its target price for HYBE (Korea Stock Exchange: 352820) on the 16th from 330,000 won to 290,000 won—a 12% reduction—while maintaining both its buy recommendation and the stock's status as the firm's top pick in the entertainment sector. The cut reflects a broader de-rating across Korean entertainment stocks, with the target price-to-earnings (P/E) multiple trimmed to 32 times. Based on the closing price of 164,000 won on the 15th, the implied upside to the new target stands at 76.8%.

A comeback quarter

iM Securities estimates that HYBE's revenue and operating profit for the third quarter (July–September) will reach 1.501 trillion won (up 106% year on year) and 172.2 billion won, respectively—the latter a return to profit from a year-earlier loss. That operating profit figure is broadly in line with the market consensus of 164.2 billion won.

The strong quarter reflects BTS's "ARIRANG" world tour, which included 16 stadium dates in North America and eight in Europe, alongside expanding Western tours by younger acts such as ENHYPEN, KATSEYE, and CORTIS. For the first time, audiences in Western markets are estimated to have accounted for more than 70% of total concert attendance. Quarterly ticket sales approached three million—a record for the company.

These results matter because they demonstrate that HYBE is recovering its profitability following the disruption caused by BTS members' mandatory military service. The group's annual operating profit collapsed from 184 billion won in 2024 to just 49 billion won in 2025, driven primarily by the absence of concert revenue while most BTS members were enlisted. A full-year operating profit of 273 billion won is now forecast for 2026. The central question for investors had been whether HYBE could sustain double-digit operating margins without BTS; the third-quarter outlook suggests it can, which should help restore confidence.

A softer fourth quarter

The momentum is expected to ease in the final quarter (October–December), as the share of Western concert dates declines. iM Securities forecasts fourth-quarter revenue of 1.159 trillion won and operating profit of 127 billion won. For the full year, the firm projects revenue of 4.808 trillion won and operating profit of 273 billion won.

Younger acts as the long-term test

The crucial variable for HYBE's medium-to-long-term outlook is whether its newer, younger acts can generate meaningful revenue in Western markets. KATSEYE has placed five songs on the Billboard Hot 100 this year and is currently running a 31-date North America and Europe tour from September, with an estimated audience of approximately 630,000. CORTIS, which debuted in August 2025, is on track to sell six million albums in its first full year of activity—a striking figure given that it has released only one new record, with the bulk of sales driven by catalogue purchases from a rapidly growing fanbase. iM Securities notes that both groups are posting meaningful gains in key digital metrics, including TikTok followers and YouTube views in the United States.

Valuation and risks

At roughly 17 times 2027 forward earnings, iM Securities argues that the current share price already prices in excessive pessimism about a post-BTS-tour growth gap. Key catalysts for next year include continued leverage from BTS touring, monetisation of KATSEYE and CORTIS in Western markets, the debut of a new US-based act, and comebacks from NewJeans and SEVENTEEN (currently performing as an eight-member group). Additional BTS dates in Japan, the Middle East, and potential encore shows could, if they exceed market expectations, reduce uncertainty around HYBE's 2027 earnings.

Nonetheless, investors face real risks. The share price has fallen more than 59% from its 52-week high of 404,500 won to the current 164,000 won. The target price itself has been cut five consecutive times, from 450,000 won in February last year to the current 290,000 won. The pattern of repeated downward revisions to earnings estimates—by iM Securities and the broader market alike—raises legitimate questions about forecast reliability.

The military service schedules of SEVENTEEN's Korean members add further complexity. Dokyeom and Mingyu are due to enlist in September 2026; Seungkwan and Dino on 26th October 2026; and Vernon on 20th August 2026. The earliest expected discharge date is Wonwoo's, on 2nd January 2027, making a full-group resumption of activity unlikely before the second half of 2027. The prolonged hiatus of NewJeans—signed to HYBE's subsidiary ADOR—also remains a source of uncertainty for music streaming and album revenue.

How HYBE compares with rivals

In terms of touring scale, HYBE leads its domestic peers. It has three acts that individually draw more than one million concertgoers (BTS, SEVENTEEN, and TXT), compared with zero at SM Entertainment, two at JYP Entertainment, and one at YG Entertainment. HYBE also fields the largest total roster of touring acts, at eleven. The caveat is that its newer acts have yet to prove their commercial weight in Western venues. KATSEYE's current tour averages around 20,000 attendees per show, a long way behind BTS (53,000) and SEVENTEEN (32,000). iM Securities is candid that a genuine re-rating of the stock will require younger acts to scale up to venues of 30,000 or more and demonstrate consistent profitability—a threshold they have not yet crossed.