Eugene Investment & Securities on the 25th raised its target price for LG CNS to 111,000 won from 93,000 won, saying the company is expanding its business beyond its existing digital transformation (DX) operations to artificial intelligence transformation (AX) and Robotics transformation (RX). It maintained a "buy (BUY)" rating.
Park Jong-sun of Eugene Investment & Securities said the recent strengthening of cooperation between Nvidia and LG Group is expected to have a positive effect on LG CNS's AI and robot business expansion. After the meeting on the 8th between Jensen Huang, Nvidia chief executive officer (CEO), and Koo Kwang-mo, LG Group chairman, LG Group is seen as increasingly likely to expand the scope of cooperation with Nvidia beyond AI to Robotics.
In particular, LG CNS is expected to move a step beyond its existing AI service-centered operations to lead the RX market with robot operation platforms "PhysicalWorks Forge" and "PhysicalWorks Baton." It has secured various references that link AI agents and robots, and is therefore expected to expand external business going forward.
Earnings are also expected to continue stable growth. Eugene Investment & Securities projected second-quarter revenue on a consolidation basis at 1.5208 trillion won, up 4.2% from a year earlier, and operating profit at 145.4 billion won, up 3.3%. It said growth in cloud and AI revenue is expected to drive results.
In the mid to long term, in addition to stable growth in cloud, data centers, and financial DX, AX and RX are expected to establish themselves as new growth pillars. Accordingly, the share of cloud and AI is forecast to expand from 58.5% this year to 59.3% next year and 60.5% in 2027.
Park said, "LG CNS is expanding its business areas from DX-based operations to AX and RX," and "along with stable earnings growth, the value of the AI and robot business will be fully reflected."