Meritz Securities maintained its "Buy" recommendation on LG Electronics on the 7th, raising its target price to 260,000 won.
Meritz analyst Yang Seung-su projects LG Electronics' operating profit for the second quarter of 2026 at 1.4734 trillion won — a 130.4% increase year on year and 42.4% above the market consensus of 1.0346 trillion won. Revenue for the same period is forecast to reach 22.7939 trillion won, up 9.9% year on year.
The analyst attributes the anticipated earnings surprise to several factors: a tariff rebate windfall, price increases and subscription-appliance growth in the Home Solutions (HS) division, and expanding sales of high-margin infotainment systems in the Vehicle Solutions (VS) division. Strong results at LG Innotek, an affiliate whose financials are consolidated into LG Electronics' accounts, are also expected to contribute to the improvement.
The report identifies two emerging businesses as the central drivers of a re-rating in the share price: AI data-centre cooling systems and robotics. The analyst argues that these developments provide a more substantive basis for revaluation than the enthusiasm that once surrounded expectations of an "Apple Car" partnership.
On the cooling side, qualification tests with North American hyperscaler clients are in their final stages. Once a firm order is secured, the business is expected to begin contributing to earnings within six to nine months. Liquid-cooling CDU (coolant distribution unit) products are also undergoing qualification trials with AI GPU customers.
The robotics business is being developed along two tracks: actuators and home robots. LG Electronics plans to deepen its collaboration with Nvidia on physical AI, with the aim of gathering operational data and refining algorithms in real-world robotic environments.
The annual operating profit estimate for 2026 has been revised up by 26.3% to 4.3611 trillion won. The target price was derived by applying the KOSPI's (South Korea's main stock index) 12-month forward price-to-book ratio of 1.72 times to a 12-month forward book value per share of 151,297 won. Based on the current share price of 185,700 won (as of 5th July), the implied upside is 40.0%.