$200 Is the Number to Watch for Qualcomm Stock, Says Analyst
It is true that following the year’s seismic events, most won’t look back fondly on 2020. However, if you happen to be a Qualcomm (QCOM) investor, you might have some good memories to tap into.
The semiconductor giant has provided shareholders with a long list of positive developments - from blowout earnings, to favorable court case outcomes to the resolution of previous business overhangs. As a result, shares have accumulated 73% of gains throughout the year.
That said, with 2021 at the gate, the future looks brighter still. At least, that is the opinion of Baird analyst Tristan Gerra.
The analyst initiated coverage of Qualcomm with an Outperform (i.e. Buy) rating and a Street high price target of $200. Investors could be locking in gains of 34%, should Gerra’s call go according to plan. (To watch Gerra’s track record, click here)
Gerra points out that Qualcomm has several tailwinds pushing it forward, with one major catalyst at the core.
“Qualcomm is at the center of the unfolding 5G secular cycle, eventually expanding from smartphones to many end markets including automotive and massive IoT, while ARM-based processor architectures are on the cusp of mass adoption in notebooks,” the 5-star analyst said. “Huawei dynamics will benefit Qualcomm's market share in China next year, in our view, while Qualcomm has made significant progress with RF content around its 5G Snapdragon platform.”
ARM processors’ adoption rate in notebooks is expected to bounce from less than 2% this year to over 8% next year, and the “significant incremental revenue opportunity” from RF, are both strong catalysts for Qualcomm in 2021. However, it is the 5G opportunity which is the bull case’ main driver.
Growth in 5G phone units is anticipated to more than double next year, and Apple – who use Qualcomm chips – is expected to ramp up iPhone builds for 1H21 by almost 30%.
On top of the “660 QCT (Qualcomm CDMA Technologies) design wins as of last quarter,” the company boasts multi-year licensing agreements with all major smartphone OEMs.
Furthermore, with 5G expected to play a major role in other adjacent industries, such as IoT, automotive (telematics, infotainment, ADAS), and core/edge AI, Qualcomm can leverage its “IP leadership in 5G technology into new applications and end markets.”
So that’s Baird’s view, how does the rest of the Street see 2021 panning out for Qualcomm? 17 Buys and 8 Holds add up to a Moderate Buy consensus rating. The forecast is for 9% upside, given the average price target clocks in at $162.68. (See Qualcomm stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
