Apple’s hotly anticipated iPhone 12 launch hogged Tuesday’s expertise headlines, however for Canaccord analyst Michael Walkley, the launch acts as affirmation of the bull thesis for chipmaker Qualcomm (QCOM).
With all 4 new fashions boasting 5G capabilities, it’s Qualcomm, Walkley says, that stands to learn from the brand new “long-term 5G funding cycle.”
“We anticipate sturdy earnings in F2021 and past as 5G smartphones ramp, the combo of 5G development benefitting Qualcomm with 50% higher content material than a 4G smartphone, Apple re-enters the mannequin for QCT shipments, and Huawei returns to the mannequin for licensing funds,” the 5-star analyst mentioned.
Qualcomm has already signed off on long-term offers with all main OEMs and its QTL (Qualcomm Expertise Licensing) section now boasts over 100 5G licenses.
Walkley believes the combo of steadily enhancing smartphone gross sales and the 5G alternative ought to “result in sustained development by means of F2022.” The analyst estimates “the combo of 5G smartphones will develop from roughly 200M items in C2020 to 450M-500M items in C2021 to roughly 1B items in C2022.”
In actual fact, along with sturdy development alternatives in markets equivalent to IoT and automotive, Walkley anticipates QCT (Qualcomm CDMA Applied sciences) will develop its income from $16.10 billion in F2020 to $24.2 billion in F2022.
Furthermore, at Apple’s launch occasion, Verizon’s CEO joined the presentation to announce its objective of bringing 5G Extremely-Wideband companies to 60 cities this yr. For Walkley, Verizon’s ambition additional provides to the Qualcomm bull case.
“We view the concurrent iPhone launch and Verizon announcement as a powerful optimistic for 5G buyer adoption as 5G service expands throughout the globe at a higher scale. With 5G gross sales ramping and Qualcomm’s management place, we consider this could drive sturdy earnings development,” Walkley summed up.
All in all, Walkley reiterated a Purchase on QCOM shares, alongside a $150 worth goal. What’s in it for buyers? Upside of 16% from present ranges. (To look at Walkley’s monitor file, click here)
The Road at the moment has a cautiously optimistic outlook for the chip large. The analyst consensus charges Qualcomm a Reasonable Purchase primarily based on 15 Buys vs. eight Holds. Nonetheless, shares have had a bountiful 2020 and are up by 44% year-to-date, and as such, the $128.33 common worth goal suggests they may keep vary sure for the foreseeable future. (See QCOM stock analysis on TipRanks)
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Disclaimer: The opinions expressed on this article are solely these of the featured analyst. The content material is meant for use for informational functions solely. It is extremely necessary to do your personal evaluation earlier than making any funding.