Investors seem concerned about Qualcomm (QCOM) losing a large chunk of revenue due to Apple’s plan to proceed with the internal construction of an iPhone modem. However, the Tigresa analyst Ivan Feinseth sees many reasons why Qualcomm “will continue to benefit from growing global demand for smartphones and continued demand for high-speed 5G global communications network chips.”
The 5-star analyst expects that the global launch of 5G will result in “a higher return on capital, a higher economic benefit and a greater creation of value for shareholders in the long term.”
Feinseth therefore reiterated a Buy rating on QCOM’s shares and set a price target of $ 195. Investors could be sitting with 38% gains, should Feinseth’s forecast unfold in the coming months. (To view Feinseth’s history, Click here)
While Qualcomm is an undisputed leader in smartphone chips, outside of its core communications market, it continues to diversify into newer ones. Feinseth expects the non-communication efforts to generate more than $ 10 billion in annual revenue.
One of those markets where the company is making a dent is the automotive industry, where to meet the increased demand for embedded processors, Qualcomm is increasing production. Automotive applications using QCOM processors include ADAS (Advanced Driver-Assistance Systems), where the Snapdragon Ride launched in 2020 is making waves, and cloud and edge computing. The company has also established development partnerships with more than “30 industry-leading OEMs,” from where QCOM processors are directed into wireless Internet homes and commercial gateways.
There’s also the possible acquisition of autonomous vehicle technology company Veoneer. Qualcomm recently announced a cash offer to acquire the company for just under $ 4.5 billion financed with available cash and without the need for additional financing.
“QCOM’s significant R&D capabilities and resources enable it to maximize the value of existing Veoneer technologies and enable further development of new and more advanced automotive technology capabilities,” said Feinseth.
If Venoeer comes on board, the company will follow in Nuvia’s footsteps. Qualcomm closed the acquisition in March, paying $ 1.4 billion for the high-performance processor from design firm Systems on a Chip (SoC).
Speaking of investments, the company’s enviable cash position – as of June 2021, QCOM had $ 11.28 billion ($ 9.99 per share) in excess cash – will allow Qualcomm to “continue to drive investments in innovation and acquisitions. strategic and complementary strategies that will boost its leadership position itself and continue to drive revenue growth and profitability. “
So that’s Tigresa’s bullish outlook, but what does the rest of the street have in mind for the chip giant? Almost the same, as it happens. The consensus of analysts qualifies this action as Strong Buy, based on 11 purchases versus 2 withholdings. There is also a decent edge on the cards; Following the average price target of $ 186.25, the stock will appreciate ~ 32% in the coming months. (See Qualcomm’s stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.