BUY OR SELL-Samsung Elec: More gains or recovery priced in?

* Shares hit record, up 74 pct on yr vs market's 44 pct rise

* Outlook for H2, 2010 strong on LCD, chips businesses

* Won, U.S. consumer demand still lack visibility

* Shares may run out of room, correction possible (For more Reuters BUY OR SELL stories, click [BUYSELL/])

By Marie-France Han and Jungyoun Park

SEOUL, Aug 24 (Reuters) - Samsung Electronics Co Ltd (005930.KS), the world's biggest maker of memory chips and LCD screens, hit a record high on Monday, lifted by upbeat earnings expectations as it gains market share in key businesses.

The company made a spectacular turnaround this year, riding a sector recovery and a weaker local won currency, while Japanese rivals such as Sony Corp (6758.T) and Panasonic Corp (6752.T) are struggling with losses. [ID:nT306436]

Samsung's stock hit a life high of 785,000 won, gaining 3.4 percent in a broader market .KS11 up 2 percent.

Samsung shares have outperformed the index, but are they set to gain further or is the good news all priced in?

MARKET DOMINANCE

"Samsung benefited tremendously over the past year and a half from stronger brand power and a weaker currency," said James Kim, an analyst at Nomura Securities.

"The game has changed, especially against Japanese rivals, and Samsung has simply no competitor in high-margin businesses such as LED televisions."

Of 42 brokers tracked by Thomson Reuters I/B/E/S, 24 had a "buy" rating on Samsung, which is valued at about $92.5 billion, while 16 rated the stock a "strong buy". Samsung's soaring valuation demonstrates it is a play on various sectors, analysts said.

"Samsung is no longer the memory chip focused company it had been, but it now has strengths in other areas including display," said Chang In-whan, chief executive at KTB Asset Management.

"Its longer-term earnings momentum is getting more stabilized due to this and, in the longer term, by about 2010, I see Samsung shares hitting 1 million won apiece."

Brokers have raised their FY 2010 earnings estimates on Samsung by 20 percent since the company reported quarterly results on July 24. According to 40 analysts polled by Thomson Reuters I/B/E/S, Samsung is now set to report mean earnings per share of 63,321 won in FY 2010, up from estimated earnings of 52,800 ahead of the results in July.

Samsung's LCD profit outlook was boosted by a recent earthquake in Japan, stoking concerns that glass shortages may intensify and keep prices higher. [ID:nSEO37071]

The promise of an upcycle in the market for dynamic random access memory (DRAM) chips, after more than two years of price drops, is another positive for market leader Samsung.

VISIBILITY ISSUES

Many analysts say the dizzy run-up in Samsung's shares and a still cautious outlook for the global electronics sector might bring the rally to a halt.

"There are still many risks and uncertainties regarding U.S. consumer demand in 2010," said Kim Hyun-joong, analyst at Tong Yang Securities. "It's simply impossible to dissociate the electronics sector from consumption."

Samsung, which reported its first quarterly loss earlier this year, said in July it would be prepared for a possible slowdown in the LCD business. [ID:nSEO372304]

Park Hyun, analyst at Prudential Investments & Securities, is keeping his target price of 780,000 won as he expects the current quarter to represent a peak for this year.

"Samsung's results in memory and LCD look great in comparison to a weak base, and there's the possibility that the industrial environment could worsen. We expect it to undergo at least one correction, possibly in the fourth quarter, when the industry's momentum weakens."

Long term, Samsung's valuation can only go up, he said. ($1=1243.1 Won) (Editing by Jonathan Thatcher and Anshuman Daga)