By Kwanwoo Jun

Amorepacific Corp. shares rallied Thursday amid rising bets that its 2022 earnings could improve despite weak fourth-quarter results.

Shares in the South Korean cosmetics company rose as much as 11% to KRW181,000 ($151.57) and was more than 9.0% higher for most of the morning, outperforming the benchmark Kospi, which was down 0.1% at midday.

The rally followed a series of market analyst reports forecasting a profit turnaround for the company in 2022.

Seoul-based KB Securities said Amorepacific's earnings could pick up starting in the second quarter, thanks to its aggressive restructuring of loss-making Innisfree outlets in China to cut operating costs.

KB expects the company's 2022 revenue and operating profit to rise 9.0% and 23%, respectively, noting that the company is in the final leg of its business restructuring in China.

KB upgraded the stock to buy from hold and raised its target price by 21% to KRW205,000.

Yuanta Securities Korea was also upbeat on the company's digital transformation, through which it would become more focused on online sales following the restructuring.

Amorepacific also stands to benefit from the likely easing of Covid-19 curbs and border controls, Yuanta said. It upgraded the stock to buy from hold and raised its target price by 21% to KRW200,000.

Sluggish cosmetics sales, particularly in China and to Chinese resellers, weighed on the company's earnings during the quarter ended in December.

Amorepacific on Wednesday posted a net loss of KRW54.40 billion for the quarter, missing the FactSet-consensus forecast for net profit of KRW29.45 billion.


Write to Kwanwoo Jun at kwanwoo.jun@wsj.com


(END) Dow Jones Newswires

02-09-22 2332ET