Qualcomm Weakness Could Be Just the Right Opportunity for Long-Term Bulls
As QUALCOMM, Inc. (NASDAQ:QCOM) investors take a fearful step back on back of a Presidential Order from the White House, one bull spotlights an excellent buying opportunity at hand.
Therefore, though shares are dipping almost 5% on back of a “prohibited” Broadcom takeover of the chip giant, top analyst Michael Walkley at Canaccord sees a “very positive” risk/reward here; even withstanding a dashed Broadcom bid from strong-arm government action.
Going against today’s word on the Street, the analyst reiterates a Buy rating on QCOM stock with a price target of $86, which implies a 43% upside from current levels.
As far as The White House is concerned, the Broadcom deal puts the national security of the U.S. at great risk.
From Walkley’s eyes, the Broadcom bid assisted in boosting rising investor attraction to the company’s prospective value down the line. Government block on Broadcom’s deal or not, licensing disputes ranging from the big Apple to Huawei or not, one thing rings true above the rest: Walkey is betting on this enticing investment opportunity. For long-term investors willing to do the same amid “this time of uncertainty,” the analyst believes the gamble will be worthwhile- especially considering Walkley angles for a forthcoming NXP deal as well as the chance for management transitions to generate “value.”
“Given this unexpected Presidential Order, we expect Broadcom will end their pursuit of Qualcomm despite Broadcom issuing its own statement that it strongly disagrees with order. Our Qualcomm estimates and price target remain unchanged due to our belief the underlying fundamental value remains compelling, especially if it closes the NXP Semiconductor acquisition. We still anticipate the Chinese regulatory agency MOFCOM could approve the NXP acquisition in the coming weeks. Further, we believe Qualcomm could reach a potential licensing settlement with Huawei over the coming months. Should these two events occur, then we believe Qualcomm could generate roughly $6.00 in F2019 earnings […] Further, should Huawei settle, then all major OEMs but Apple would be settled for licensing,” contends Walkley.
In fact, not only does this blocked M&A opportunity not sway the analyst away from the bulls, he anticipates the move could strengthen the company’s opportunity to reach a settlement with Apple. Should this settlement come to light, the analyst believes QCOM will achieve $6.75 to $7.50 per share by fiscal 2019, and likewise deems the non-GAAP EPS target “potentially achievable.” By 2020 and “beyond,” the analyst concludes looking for earnings to fire up, especially with 5G allowing the company to capture more market share. Betting on an NXP merger closing, Walkley sees a company here with potential for powerhouse earnings and cash flow lying ahead- “a clear industry leader in the mobile, IoT, and automotive semiconductor markets […]”
Michael Walkley has a very good TipRanks score with a 67% success rate and a high ranking of #51 out of 4,789 analysts. Walkley realizes 19.1% in his annual returns. When recommending QCOM stock, Walkley gains 2.4% in average profits on the stock.
TipRanks indicates a largely optimistic analyst consensus surveying this memory chip player’s prospects. Out of 10 analysts polled in the last 3 months, 7 rate a Buy rating on QCOM stock while 3 maintain a Hold. The 12-month average price target stands at $74.00, marking a nearly 23% upside from where the stock is currently trading.
Nutanix’s Analyst Day Leaves Oppenheimer “Impressed”
Do investors understand the kind of potential NTNX shares carry? Kidron wagers no, predicting a slew of gains lie down the road for the tech company.
Kidron’s takeaways point to a corporate vision he praises as “impressive” as NTNX endeavors to transform to “the enterprise cloud, a hybrid data management and control plain that makes all underlying infrastructure (hyperconverged, data center, cloud) invisible to the user with built-in automation and machine learning to facilitate operations.”
In reaction, the analyst maintains an Outperform rating on NTNX stock with a $65 price target, which implies a close to 24% upside from current levels. (To watch Kidron’s track record, click here)
“The vision is very ambitious (especially around the public cloud) yet differentiated, and many of the pieces needed seem to be in place (or soon to come). With a unique vision, above expectations billings goals ($3B in FY21), and a growing software portfolio, we believe Nutanix will gradually get more ‘respect’ as a software/cloud company with multiples poised to expand,” adds the analyst, who pinpoints compelling prospects for expansion ahead.
Ultimately, “We come away impressed with Nutanix’s positioning and vision, and while the execution bar is high, we feel that the company has the right DNA and opportunity ahead to succeed. We believe investors have yet to fully appreciate the company’s potential and thus, even with the strong move in the shares, we see plenty of upside ahead,” Kidron concludes.
TipRanks indicates a strong confident backing for Nutanix shares. Out of 18 analysts polled in the last 3 months, 15 are bullish on NTNX, 2 remain sidelined, while 1 is bearish on the stock. However, are these analysts’ expectations as bullish as they seem? Consider that the 12-month average price target stands at $53.47, marking just a slight 1% upside potential from where the stock is currently trading.