QUALCOMM Incorporated
KeyBanc Capital Markets analyst John Vinh maintained the Overweight rating and $225 price target due to its edge AI positioning in smartphones and PCs and expanding auto sector presence.
The analyst had an investor call with QCOM management, who highlighted key points, including the expectation that Samsung Electronics Co., Ltd.
The analyst says that this could be an upside opportunity if QCOM's share on the GS25 turns out to be higher.
Also, Vinh writes that management did not update or discuss its share expectations for the iPhone 17 or SE4 for 2025, reaffirming only the 20% share outlook for 2026.
Management's high confidence in SnapDragon 8 Gen 4, anticipated to drive a 10%+ ASP increase, and near-term gross margins might be pressured by Taiwan Semiconductor Manufacturing Company Ltd.
Vinh adds that Qualcomm sees the industrial market reaching a tipping point similar to the semiconductor adoption in automotive and PCs. They anticipate growing demand for higher compute capabilities and wireless connectivity, which could drive future M&A interest.
Recently, Qualcomm reported third-quarter results with revenues of $9.4 billion, surpassing the consensus estimate of $9.22 billion. The company's earnings per share (EPS) also beat expectations, coming in at $2.33 versus the anticipated $2.25.
This performance was driven by strong growth in the Auto and IoT segments. However, the guidance for the next quarter highlighted potential headwinds, particularly the earlier-than-expected revoking of the company's license to sell to Huawei.
The company sees fourth-quarter guidance for revenue of $9.5 billion- $10.3 billion, with earnings per share expected to range from $2.45 to $2.65.
Investors can gain exposure to the stock via Invesco Next Gen Media And Gaming ETF
Price Action: QCOM shares are down 1.92% at $166.22 at the last check Wednesday.
