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The Qualcomm stand on the Cell World Congress.
Pau Barrena / AFP by way of Getty Pictures
J.P. Morgan says Qualcomm inventory isn’t getting the respect it deserves from buyers.
On Monday, analyst Samik Chatterjee reaffirmed his Obese ranking for
Qualcomm
(ticker:
QCOM
), citing its low valuation.
The “present valuation supplies substantial upside, whereas draw back stays restricted regardless of smartphone headwinds,” he wrote. “We consider there may be restricted credit score that the corporate is getting but for the success of its foray into Automotive and IoT [internet of things], along with success in RFFE [radio frequency front end].”
He additionally reiterated his $185 worth goal for the maker of cellular processors and 5G wi-fi chips. That’s about 51% of upside from the place shares at the moment are. In Monday morning buying and selling, Qualcomm inventory is up 1.1% to $122.47.
Chatterjee mentioned Qualcomm trades at simply 9 occasions his fiscal 2023 earnings-per-share estimate, versus the 16 occasions common for smartphone-chipset firms over the previous 5 years. He’s optimistic about Qualcomm’s mobile-chip enterprise and skill to achieve market share.
The “low cost to historic multiples limits draw back from additional smartphone-market weak spot, whereas diversification success supplies ample alternative to re-rate in the direction of diversified friends,” he wrote. Qualcomm ought to “profit considerably from 5G modem and RFFE gross sales to smartphone producers, in addition to construct substantial momentum in non-handset end-markets.”
In July, Qualcomm inventory fell after the corporate forecast much less income than anticipated for the September quarter, citing softening demand for smartphones.
The chip maker’s inventory has declined by 33% this yr, versus the 38% drop within the
iShares Semiconductor
exchange-traded fund (SOXX), which tracks the efficiency of the ICE Semiconductor Index.
Write to Tae Kim at tae.kim@barrons.com