Susquehanna analyst Christopher Rolland has just released his quarterly MobileSIGnals report, which examines specs of 300 new handset models entering the global market each quarter. Key takeaways include: (1) Qualcomm (NASDAQ:QCOM) takes share from MediaTek as Snapdragon 845 adoption is tracking ahead of last year’s 835; (2) Qualcomm ASPs may benefit from better mix (Snapdragon 845 and new 700 series).
As a result, Rolland raises his price target on QCOM from $62 to $67, while reiterating a Positive rating on the stock. (To watch Rolland’s track record, click here)
Qualcomm made major improvements at the core of its Snapdragon 845 processor, with new Kryo 385 CPU. This CPU incorporates customized versions of ARM’s newest A75 and A55 CPU cores. The A75 CPU cores are up to 30% faster than the previous generation, clocking as high as 2.8 GHz. Qualcomm has also implemented 2MB of L3 cache, which is designed to improve efficiency and latency across the CPU. From a commercial perspective, Snapdragon 845 is attractively positioned to take significant market share, at least if you ask Rolland.
“In 2Q18, Qualcomm held 60% share of applications processors (up +8% QOQ), on the back of its Snapdragon 845 product, which was adopted by ten different OEMs during the quarter (vs. eight OEMs adopting the 835 in 2Q17). Meanwhile, MediaTek ceded modest share (down -3% QOQ), although we note that OPPO and Vivo are now shipping handsets with their premium P60 processor,” the analyst noted.
Rolland added, “Qualcomm’s mix of high-end processors, which we define as the Snapdragon 600/700/800 series, rose to 74% in 2Q18, owing to strong adoption of the Snapdragon 845 processor (designed in at 10 different OEMs). Qualcomm continues to dominate the upper echelon of the processor market, as we identified few MediaTek wins in premium phones in 2Q18.”
TipRanks showcases QCOM as one that has drawn optimism mixed with caution when it comes to consensus opinion among sell-side analysts. Out of 13 analysts polled in the last 3 months, 6 are bullish on QCOM stock, 6 remain sidelined, while only 1 is bearish on the stock. With an upside potential of nearly 11%, the stock’s consensus target price stands at $64.20.