Is Samsung stock about to top all-time high?

The unveiling of Samsung (Korea Stock Exchange: 593-KR)‘s Galaxy S6 devices has fueled optimism over the company’s outlook, with many investors betting that the new line-up will take the stock to record highs.

“We expect Samsung Electronics to transit from a high-growth stock to a value stock with healthy cash flows after bursting the smartphone bubble. We also believe it will gradually increase its shareholders’ returns,” Seoul-based analysts from Nomura (Tokyo Stock Exchange: 9716.T-JP) wrote in a note.

Nomura raised its target price for the world’s biggest smartphone manufacturer to 1.75 million won (Exchange:KRW=) from 1.65 million won last week. The new target represents a 10 percent upside from Samsung’s all-time high of 1.58 million won, clinched in January 2013.

The heaviest-weighted stock on the benchmark Kospi (Korea Stock Exchange: .KS11) index has risen 6.9 percent since launching its new devices on March 1 and is up 9.7 percent year-to-date. That is a stark contrast to its dismal performance last year, when it lost 1.6 percent as cut-throat competition in the smartphone market hurt earnings.

Improved earnings

The Galaxy S6 along with the S6 Edge , which has been hailed as the first smartphone with a curved display, have received positive reception, boosting hopes that the struggling mobile division may finally regain its footing after its share of the global smartphone market shrank to 24.7 percent in 2014 from 32.2 percent in 2013, according to data from Strategy Analytics.

“The launch of S6 reconfirmed Samsung’s technology competitiveness, dispelling low expectations about the mobile division,” Nomura analysts said.

“In addition to significant improvements in the design, we were impressed that Samsung’s vertical integration lived up to its strong potential and will support its structural competitiveness in the smartphone space,” Nomura added, referring to the use of in-house displays and chips in the new smartphone line-up.

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Citi (NYSE:C) shares the optimistic outlook and estimates Samsung will sell 46 million smartphone units this year, a 21 percent rise from an initial forecast of 38 million, which will likely translate into an 11 percent rise in operating profit.

In 2014, the South Korean electronics giant suffered its first annual earnings decline in three years due to weakness in its smartphone business. Earnings from smartphones, tablets and other mobile gadgets fell 64 percent annually in the October-December period to 1.96 trillion won. In contrast, the semiconductor division stood at 2.7 trillion won, the highest in more than four years.

But, this is expected to change.

“We expect success of the S6 to have a positive chain impacts on market leadership and in-house component businesses,” Citi’s report stated. “Going forward, positive catalysts [for the stock] should include confirmation of mobile stabilization, solid semiconductor earnings, positive year-on-year growth in 2015 operating profit and friendlier shareholder return policy.”

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Eyeing 1.8M won?

These rosy factors have spurred analysts to bet on an ambitious price target of 1.8 million won – 21 percent above current levels.

One of them is Barclays (London Stock Exchange: BARC-GB), which reiterated a buy call and upgraded its 12-month price target from 1.7 million won last week.

Daewoo Securities, which shares the same target, has Samsung as its top pick in the South Korean semi-conductor space. “As the share price approaches its historical high, we believe there will be a lot of challenges in the market, in terms of valuation so Samsung will bounce around its previous high, but eventually break records this year,” Jonathan Hwang, equity analyst for Technology and Semiconductor at KDB Daewoo Securities, told CNBC.

After hovering near record highs in the previous sessions, Samsung shares closed down 2.2 percent at 1.47 million won on Wednesday due to profit-taking. “Some investors are starting to take some profits as shares have had a nice run and are near all-time highs [but] the stock is still cheap and has further upside,” said Mark C. Newman, senior research analyst at Sanford C. Bernstein.

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