Investors appear concerned with Qualcomm (QCOM) losing a huge chunk of revenue due to Apple’s plan to proceed with building an iPhone modem in-house. However, Tigress analyst Ivan Feinseth sees plenty of reasons why Qualcomm will “continue to benefit from global smartphone demand growth and ongoing chip demand for high-speed 5G global communications networks.”
The 5-star analyst expect 5G’s global rollout will result in “increasing Return on Capital, greater Economic Profit, and increasing long-term shareholder value creation.”
Feinseth, therefore, reiterated a Buy rating on QCOM shares and set a price target of $195. Investors could be sitting on gains of 38%, should Feinseth’s forecast play out over the coming months. (To watch Feinseth’s track record, click here)
While Qualcomm is an undisputed smartphone chip leader, outside its core communications market, it continues to diversify into new ones. Feinseth expects the non-communication endeavors to generate over $10 billion in revenue annually.
One such market the company is making a dent in, is that of the automotive industry, where to meet the surge in demand for onboard processors, Qualcomm is ramping up production. Automotive applications using QCOM processors include ADAS (Advanced Driver-Assistance Systems) where the 2020 launched Snapdragon Ride is making waves, and cloud and edge computing. The company has also notched development partnerships with over “30 industry-leading OEMs,” from where QCOM processors go toward wireless internet homes and business gateways.
There’s also the potential acquisition of autonomous vehicle technology company Veoneer to look forward to. Qualcomm recently announced an all-cash bid to acquire the company for just under $4.5 billion funded with available cash and without the need for extra financing.
“QCOM’s significant resources and R&D capabilities enable it to maximize the value of Veoneer’s existing technologies and enable greater development of new and more advanced automotive technology capabilities,” Feinseth noted.
Should Venoeer come onboard, the company will follow in Nuvia’s footsteps. Qualcomm closed the acquisition in March, paying $1.4 billion for the high-performance processor Systems on a Chip (SoC) design company.
Talking 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 enable Qualcomm to “continue to drive investments in innovation, and strategic, complementary acquisitions that will further its leadership position and continue to drive revenue growth and profitability.”
So, that’s Tigress’ bullish outlook, but what does the rest of the Street have in mind for the chip giant? About the same, as it happens. The analyst consensus rates this stock a Strong Buy, based on 11 Buys vs. 2 Holds. There’s decent upside in the cards too; going by the $186.25 average price target, shares will appreciate ~32% over the coming months. (See Qualcomm 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.