Following the Mobile World Congress (MWC) in Barcelona last week, Qualcomm (QCOM) is making headlines for what many deem as a significant showing there. The company’s success in the 5G sphere was one of the primary topics of conversation, as Qualcomm has put itself in prime position to take advantage of the burgeoning network technology. There was also the announcement that Samsung would use Qualcomm’s fingerprint sensor on its new S10 phones, which further signaling to the tech and investing world that Qualcomm is more than simply a mobile applications processor, and can handle other things on the supply chain for smartphones.
On the news and its strong showing in Barcelona, Canaccord analyst Michael Walkley reiterates his Buy rating on the stock and $75 price target, which implies about 40% upside from current levels. (To watch Walkley’s track record, click here)
Speaking on 5G, Walkley says his meetings at MWC show that Qualcomm “remains well ahead of its competitors for 5G leadership.” He further says that the company is “is well positioned to benefit with increasing smartphone market share with leading Android OEMs as 5G smartphone shipments ramp in 2H/19 and beyond.”
While 5G is still in its early stages of implementation and adoption, Walkley says he “anticipate[s] the first devices using the Snapdragon 855 (5G modem) will arrive in Q2/C2019 and ramp in volume exiting C2020.” It Snapdragon X55 is “launching now and represents
Qualcomm’s second generation 5G modem before competitors are commercially shipping first generation 5G modems.” Looking ahead, the analyst believes “Qualcomm will generate much stronger QCT margins in 2H/F2019 and could return to over 20% EBT margins once 5G smartphones ramp longer-term.” Walkley says that “Qualcomm [is] heavily invest[ed] in 5G R&D,” which he expects will result in expanded “margins as 5G sales ramp longer-term.
Even though 5G technology remains a huge potential driver for the company moving forward, Walkley is optimistic that its licenses disputes with Apple and Huawei will represent an even larger boost to the stock in 2019. The analyst says, “we believe a determination by the FTC that leaves Qualcomm’s global licensing practices generally intact will help
Qualcomm remains a strong business and many see tremendous opportunity for the future. But even so, TipRanks analysts of 16 analyst ratings on the stock shows a consensus Moderate Buy rating with an even split of eight analysts Buying and eight recommending Hold. The average price target among these analyst stand at $62.54, representing a 16% rise from current levels. (Get TipRanks’ free analysis report on QCOM)