Analysts from Canaccord weighed in on solar company SolarCity Corp (NASDAQ:SCTY) and chip maker QUALCOMM, Inc. (NASDAQ:QCOM) Wednesday, following SolarCity’s Analyst Day and QUALCOMM’s strategic review.
Canaccord’s Jonathan Dorscheimer commented on SolarCity following the company’s Analyst Day. He stated that although the company presented itself as “industrial chic” at Tesla’s stage, attendees were primarily focused on the possibility of congress issuing an ITC extension for the solar industry, where a decision is expected later today. Dorscheimer acknowledges a vote in favor would benefit the company and the industry as a whole, but states only a slight likelihood of the extension passing.
After attending Analyst Day, the analyst was bullish on “the company’s impressive operations and cost-down goals in order to become cash flow positive in the near term.” Similarly, the analyst expressed positive sentiment regarding the company’s “brand, channel, scale, and first mover advantage.” Despite these upsides, the analyst states that investors remained concerned over regulatory challenges, which “overshadow long-term goal and continue to weigh on the company’s risk profile and stock price.” Of these challenges, the analyst highlights California’s proposed use of net-metering and the company’s lawsuit against Arizona’s SPR involving anti-solar rate changes. In light of these developments, the analyst remains bullish on the company because the “risks have been sufficiently discounted.” He concludes, “With a focus on long-term economic value creating, contingent on successful cost reductions, we maintain our BUY rating and $48 price target.”
According to TipRanks’ statistics, out of the 11 analysts who have rated SCTY in the last 3 months, 6 gave a Buy rating while 4 remain on the sidelines. The average 12-month price target for the stock is $52.11, marking a 3% downside from where shares last closed.
Analyst Michael Walkley weighed in on Qualcomm following the company’s strategic review. Earlier this week, the company’s Board and Special Committee determined that Qualcomm’s current corporate and financial structure will drive shareholder value in the long term. Walkley also commented on the summer’s split of QCT (Qualcomm CDMA Technologies) and QTL (Qualcomm Technology Licensing), stating it was unexpected given “the synergies within the two businesses.” The analyst also believed the company would announce other strategic decisions, such as initiatives for cost reductions.
The analyst expressed positive sentiment regarding the company’s QTL segment, stating that the recent China licensing deals could generate revenue towards the “high end of management’s guidance.” During the conference call, the company increased its Q1/2016 guidance due to “stronger mobile device sales and [device] ASPs,” which positively impacted its QTL segment. Management was also upbeat regarding the company’s royalty fees from its Chinese OEMs.
Despite “high-tier smartphone chipset share dynamics negatively [impacting] F2015 estimates,” the analyst believes the “announced $1.4 billion cost savings program and improved Snapdragon sales” will cause QTC to bounce back in the coming year. The analyst was also positive regarding the company’s ability to “return QTC operating margins” by the end of the fiscal year.
Walkley maintains his Buy rating for the company with a $65 price target.
According to TipRanks’ statistics, analyst Michael Walkley has a 60% success rate recommending stocks with an average return of 15.9% per recommendation. Out of the 17 analysts who have rated QCOM in the past 3 months, 9 gave a Buy rating while 8 remain on the sidelines. The average 12-month price target for the stock is $63.53, marking a 32% upside from where shares last closed.