A Tale of Two Tech Giants: Analysts Weigh In on Apple Inc. (AAPL) and QUALCOMM, Inc. (QCOM)

Wall Street analysts are sharing bullish sentiment on two of the tech industry’s leading giants: Apple Inc. (NASDAQ:AAPL) and QUALCOMM, Inc. (NASDAQ:QCOM). Whereas Drexel Hamilton likes Apple’s odds after determining the holiday season proved to be positive for the sales cycle, Canaccord is eyeing massive long-term potential for Qualcomm. Let’s dive in:

Apple One of Most Globally Underappreciated Stocks

Drexel Hamilton analyst Brian White is highlighting Apple on back of a seasonality beat with record-high December sales seen in his Apple Monitor index, which tracks sales of nine ‘important’ publicly-traded Apple suppliers based in Taiwan. In reaction, the analyst maintains confidence on the tech titan’s stock, reiterating a Buy rating with a price target of $185.00, which represents a 55% increase from where the shares last closed.

Though final December sales in the analyst’s Apple Monitor saw a 2% month-over-month dip, in context, this was still a step forward comparatively against the average 11% decline over the past consecutive eleven years. Therefore, this year’s December slant is far improved from the 31% month-over-month decrease seen in December 2015 and “compares favorably” when considering the five-year average of 6% downturns.

White asserts, “In our view, Apple is one of the most underappreciated stocks in the world. In the near-term, we look for Tim Cook to make Apple grow again in 1Q:FY17 on the back of the iPhone 7 and a happy holiday season, while we look forward to the launch of the iPhone 8 in September 2017 and more color on future innovations. Finally, the potential for more favorable tax repatriation policies could be a positive catalyst for Apple.”

For the analyst, the future lies in the automotive market, and Apple is ready to bite into its size in the market as “the only computer-related company in the world with a consumer focus that develops hardware and software to work seamlessly together.” With the titan’s CarPlay showcasing over two hundred available models coupled with forty plus auto brands, White sees an impressive horizon with “bigger ambitions” lying ahead.

Ultimately, “We believe the size of the opportunity and Apple’s capabilities dovetail well for an Apple Car to be the company’s iPhone of the future. The interest in robotics continues to grow and on display at CES. Our research indicates Apple is showing early interest in the robotics market. Finally, VR/AR was on display at CES, an area that Apple has shown interest and we believe has been testing products,” White surmises.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Brian White is ranked #258 out of 4,350 analysts. White has a 58% success rate and gains 8.0% in his yearly returns. When suggesting AAPL, White earns 20.6% in average profits on the stock.

TipRanks analytics indicate AAPL as a Strong Buy. Based on 28 analysts polled by TipRanks in the last 3 months, 23 rate a Buy on AAPL stock while 5 maintain a Hold. The 12-month average price target stands at $134.17, marking a nearly 13% upside from where the stock is currently trading.

QUALCOMM’s Advantage Lies in its Long-Term Prospects

Canaccord top analyst Michael Walkley provides a bullish perspective on Qualcomm despite reigning in March quarter projections following CES 2017, the annual global consumer electronics and consumer technology tradeshow in Las Vegas.

Though the analyst anticipates a seasonal miss in terms of the first half of 2017 when looking at the industry’s smartphone sales, he praises the chip giant’s long-term potential ahead of the forthcoming NXP Semiconductors NV (NASDAQ:NXPI) acquisition as well as rising royalty collections from Chinese OEMs.

As such, the analyst reiterates a Buy rating on shares of QCOMM with an $81 price target, which represents a 23% increase from where the stock is currently trading.

The short-term is less favorable for the giant when taking into account an earlier Chinese New Year, a decline in Sansung sales following the Galaxy Note 7 explosive recall, and March quarter smartphone sales that did not meet its usual seasonal track record.

Nonetheless, the analyst remains confident when glancing at the bigger picture, underscoring, “We believe continued progress with Chinese OEMs resulted in Qualcomm exiting F2016 with 73% of Chinese OEM global units paying royalties. QCT is also benefiting from a strong product ramp with Chinese OEMs driving likely strong Q1/F’17 MSM shipments. […] We believe the NXP merger will create a company with significant earnings power and cash flow and develop into a clear industry leader in the mobile, IoT, and automotive semiconductor markets backed by an extremely strong combined Qualcomm, NXP (Philips) and Freescale (Motorola) IP portfolio.”

“Overall, our longer-term positive thesis remains intact as we believe QCT is gaining higher-end Android market share and QTL is returning to growth with stronger collections and new adjacent market opportunities,” Walkley concludes.

As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, top five-star analyst Michael Walkley has achieved a high ranking of #43 out of 4,350 analysts. Walkley upholds a 61% success rate and realizes 15.0% in his annual returns. When recommending QCOM, Walkley yields 5.7% in average profits on the stock.

TipRanks analytics demonstrate QCOM as a Buy. Based on 19 analysts polled by TipRanks in the last 3 months, 8 are bullish on Qualcomm stock and 11 remain sidelined. With a return potential of nearly 13%, the stock’s consensus target price stands at $73.87.


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