Samsung Electronics (005930.KS): 3Q headline in-line; 3Q earnings to be the floor in the next 12M; OW

Samsung Electronics (SEC) disclosed 3Q26 headline earnings that came in-line with the recently lowered consensus estimates. We have been advocates of a higher for longer upcycle and believe the share price action implies the market is underestimating the memory's earnings power in the 12-18M, where we view 3Q26 earnings to be the floor. SEC's 3Q26 headline OP of W107.4trn was broadly in-line with the recently lowered consensus, predominately due to F/X headwind and labor cost provisioning. We expect 3Q DRAM/NAND ASP to have trended ahead of our initial expectation, driving W100trn+ DS division OP, while LSI/Foundry earnings stayed in the red. Heading into 3Q earnings conference calls, we expect investors to monitor room for EPS upside, cash allocation plans, and incremental signals to turn more bullish in 27/28E S/D. We expect SEC share price to gradually appreciate in tandem with the robust earnings growth (JPMe: 35% EPS CAGR in 26-28E) and remain constructive on the stock. We are Ove