NAVER & Kakao: Why 10 Korean Brokerages Cut Targets But Kept 'Buy' Ratings

Ten Korean securities firms cut their price targets on NAVER (035420) and Kakao (035720) in April 2026 — and every single one of them maintained a BUY recommendation. That seemingly contradictory signal is worth unpacking.

By April 13, NAVER was down 16.7% year-to-date and Kakao had fallen 20.6%, both significantly underperforming the broader KOSPI. The culprit is AI capex front-loading: NAVER's GPU-related capital expenditure is expected to exceed 1 trillion KRW in 2026, up from roughly 700 billion KRW the year prior. This cost surge pushed the 2026E EPS estimate from 14,147 KRW down to 13,790 KRW and compressed the operating margin outlook from 18% to 17.3%.

The valuation gap is striking. At NAVER's April 10 closing price of 202,000 KRW, the forward P/E is just 14.6x. Alphabet carries a ~$2T market cap at a forward P/E of 20x; Meta trades at 24x with a ~$1.4T market cap. NAVER holds over 60% domestic search share with diversified revenue across commerce, fintech, and IP content — no structural justification exists for this discount.

Kakao's 12-month consensus target stands at 76,115 KRW, implying about 28% upside from the current ~59,500 KRW. The broker community is keeping BUY because the cost cycle is temporary and the platform moats are intact.

Three scenarios for 2026:

• Bull (25%): AI agent revenue visible in Q2, re-rating to P/E 17-18x, NAVER 240,000 KRW+. Trigger: QoQ ad/commerce revenue growth 10%+.
• Base (50%): Range-bound as AI costs persist through H2 2026. No re-rating until monetization proof.
• Bear (25%): Monetization delayed, EPS cut another 10%+, NAVER tests 180,000 KRW.

The base case is 50% because the AI capex cycle is unlikely to resolve before H2 2026. But for investors with a 12-18 month horizon, a P/E of 14.6x against global internet peers at 20-24x represents a margin of safety that 10 brokerages are unwilling to abandon.

For the full analysis in Korean, visit Snakestock