Qualcomm's Soaring Success with iPhone Modem Deal - Analyst Eyes Higher Valuation
Portfolio Pulse from Anusuya Lahiri
Piper Sandler analyst Harsh V. Kumar reaffirmed an Overweight rating on Qualcomm Inc (QCOM) with a $165 price target, highlighting its growth in IoT and automotive sectors. Qualcomm's IoT revenues are expected to rise, with potential quarterly revenues of $1.5 billion+ in the future. The automotive segment is projected to reach $3 billion in annual revenues by fiscal 2025. Qualcomm also secured 100% of the iPhone 15 modem share for 2023 and a 3-year deal with Apple, assuming a 20% share in the 2026 iPhone release. Despite current trading at a ~15x P/E multiple, Kumar suggests Qualcomm should trade at a premium (18x-20x P/E) due to its diversification and growth prospects.
February 13, 2024 | 8:57 pm
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NEUTRAL IMPACT
Apple's deal with Qualcomm for iPhone modems, including 100% share for the 2023 iPhone 15 and a 20% share in the 2026 release, underscores a continued partnership and potential impact on future iPhone connectivity features.
While the deal with Qualcomm for iPhone modems directly impacts Qualcomm's revenue and valuation prospects, its immediate effect on Apple's stock is neutral. The partnership is significant for future iPhone models' connectivity features, but it's an expected continuation of their relationship rather than a transformative new development.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
Qualcomm's reaffirmed Overweight rating and $165 price target by Piper Sandler, along with its growth in IoT and automotive sectors and a secured deal with Apple for iPhone modems, highlight strong future revenue prospects.
The reaffirmed Overweight rating and optimistic revenue projections from IoT and automotive sectors, coupled with the secured modem deal with Apple, suggest a positive outlook for Qualcomm's stock. The analyst's suggestion that Qualcomm should trade at a premium due to its diversification further supports a positive short-term impact.
CONFIDENCE 90
IMPORTANCE 90
RELEVANCE 100