Canaccord analyst Michael Walkley weighed in on two major semiconductor companies, QUALCOMM, Inc. (NASDAQ:QCOM) and Qorvo Inc (NASDAQ:QRVO), after meeting with management from both companies at the Mobile World Congress in Barcelona, a three day convention of major international mobile and technology providers. Walkley is bullish on both, citing increased chip sales, licensing deals, and favorable RF trends.
At the Mobile World Congress in Barcelona, Qualcomm was by far the winner. Several major phone makers, notably Samsung and LG, released new models with the company’s chip set, Snapdragon 820, praised for its sophistication and efficiency. Following his meetings with management at the WMC and analyst day, analyst Michael Walkely weighed in on the company.
The analyst is “impressed by the long-term technical roadmap” and states that new increased focus on core mobile. Specifically, he believes QCOM will meet its QTL (Qualcomm Technology Licensing) growth targets of $10 billion in revenue by 2020 as well as “removing $800M or 15% from the organic QCT expense run rate without impacting the growth potential of the business.” Despite a difficult smartphone macro environment, which the analyst believes will affect the company in the short-term, the company’s recent successful endeavors have made “great progress” in the past quarter.
Walkley points to recent licensing agreements with Chinese OEM’s and Lenovo as drivers of “improved QTL trends” in the second half of 2016 and FY17. Similarly, he believes that successful Snapdragon 820 sales, including an increased share in Android and Samsung, as well as cost cutting measures should generate strong revenue for the QTC (Qualcomm CDMA Technologies) segment in the same period.
The analyst reiterates a Buy rating on shares with a $65 price target. He concludes, “Overall, we anticipate gradually recovering QCT trends during F’16 primarily due to improved Android premium tier share with the Snapdragon 820, increasing carrier aggregation mix in China, ongoing progress on the announced $1.4B cost savings program, and stronger MSM volumes following the seasonally weak March quarter.”
According to TipRanks’ statistics, out of the 19 analysts who have rated the stock in the past 3 months, 14 gave a Buy rating while 5 remain on the sidelines. The average 12-month price target for the stock is $60.13, marking a 16% upside from current levels.
Michael Walkley also weighed in on Qrvo after meeting with company management at the Mobile World Congress in Barcelona. Following the conference, the analyst believes “the RF TAM for smartphones remains a growth market for the next several years,” although cites a slowdown in the first half of 2016 given his belief that iPhone inventory continues to work through the channel.
Walkley opined, “We believe Qorvo has a broad RFIC portfolio for the mobile device market and is well positioned to benefit from secular RFIC TAM growth trends. Further, we believe Qorvo has an industry-leading non-handset related RFIC portfolio addressing the higher-margin defense & aerospace and networks infrastructure markets.”
According to TipRanks’ statistics, out of the 14 analysts who have rated the stock in the past 3 months, 10 gave a Buy rating while 3 remain on the neutral. The average 12-month price target for the stock is $58, marking a 26% upside from current levels.