Qualcomm shares are getting a boost Wednesday from Baird analyst Tristan Gerra, who picked up coverage of the mobile-phone chip company with an Outperform rating and a Street-high $200 price target. The bottom line is that Gerra sees Qualcomm as the most obvious bet on the expansion of 5G wireless networks and devices in 2021 and beyond.
“Qualcomm is at the center of the unfolding 5G secular cycle, eventually expanding from smartphones to many end markets,” including automotive applications and the internet of things, he writes. He also notes that the company’s ARM-based Snapdragon microprocessors “are on the cusp of mass adoption in notebooks.” Longer term, he adds, Qualcomm (ticker: QCOM) is “well-positioned to leverage its technology into AI [artificial intelligence] applications notably in automotive and consumer.”
Gerra sees multiple drivers for the stock in the year ahead. He notes that 5G phone unit sales are expected to more than double in 2021, and he sees Qualcomm gaining market share in China. He also expects 5G networks to see expanded use beyond phones, in areas like manufacturing, retail, health care, and autonomous and assisted driving. Gerra notes that the company now has multiyear 5G licensing agreements with all of the major smartphone makers.
He also sees the potential for “significant incremental revenue” in the RF sector, or cellular radio chips. He notes that Qualcomm’s RF technology “has now found significant traction at the two key smartphone” manufacturers, a reference to Apple (AAPL) and Samsung Electronics (005930.Korea), among others.
Qualcomm shares are up 1.7%, at $148.84, in recent trading. The S&P 500 is up 0.5%.
Write to Eric J. Savitz at [email protected]