Morgan Stanley upgrades LG Display stock rating on improved OLED outlook

Morgan Stanley upgraded LG Display (LPL) to Equalweight from Underweight, increasing the price target to KRW9,500.00, despite lowering the 2025 revenue forecast from KRW25 trillion to KRW22 trillion due to exchange rate headwinds and demand concerns. The upgrade is driven by an improved OLED product mix and discontinuation of the LCD TV business, leading to an increased operating profit estimate for 2025 and a 123% increase in the 2026 EPS estimate, albeit from a low base; the firm notes the current valuation is supported by positive earnings estimate revisions.

Analysis

Morgan Stanley has upgraded LG Display Co Ltd. (LPL) from Underweight to Equalweight, raising its price target to KRW9,500.00 from KRW8,600.00. This revision occurs despite a lowered 2025 revenue forecast for LG Display, cut from KRW25 trillion to KRW22 trillion, attributed to anticipated weaker USD/KRW exchange rates and softer demand in the second half of 2025, potentially due to tariff-induced demand pull-in. However, the firm's optimism stems from an expected improvement in LG Display's operating profit, which is now projected at KRW634 billion for 2025, up from KRW531 billion. This enhanced profitability is linked to a more favorable OLED product mix and the strategic discontinuation of LG Display's LCD TV business. Consequently, Morgan Stanley has significantly increased its 2026 earnings per share estimate for LPL by 123%, albeit from a low base, driven by higher anticipated OLED contributions, while moderating its 2027 EPS forecast by 9%. The new price target corresponds to a 2025 estimated price-to-book ratio of 0.75x. Morgan Stanley notes that LG Display's current next-twelve-month P/B ratio of 0.6x is approaching the historical mid-cycle level of 0.5x, and views the current valuation as supported by positive earnings estimate revision trends.

Key Decisions for Investors

• Investors should acknowledge the improved profit outlook driven by LG Display's strategic shift towards OLED and away from LCD TVs, which underpins Morgan Stanley's upgrade to Equalweight.
• Monitor the execution of the OLED strategy and the impact of USD/KRW exchange rate fluctuations, as these are key variables influencing future revenue and profitability.
• Consider that while positive earnings revisions support current valuations, the price-to-book ratio approaching historical mid-cycle levels suggests a balanced risk-reward profile, consistent with an Equalweight rating rather than a strong buy signal.