The last time I weighed in on Qualcomm (NASDAQ:QCOM), I noted, it “will be one of those stocks you’ll wish you had bought a year from now. After dropping $79.20, the QCOM stock has become an oversold bargain at its 50-day moving average with sizable, near-term catalysts.”
That was on Dec. 10, as the QCOM stock traded at a low of $83.69 a share. As of Jan. 7, the stock was up to $89.15 and running.
Granted, there are analysts that believe the 5G boom has been priced into QCOM.
Morgan Stanley’s James Faucette for example, noted, “We think drivers in 5G, incremental investment capabilities from Qualcomm’s agreement with Apple, and confidence in QTL [Qualcomm Technology Licensing] sustainability are now appropriately valued in light of other business risks.”
But don’t be so quick to write off QCOM. I think it has a strong shot at $100 a share this year.
QCOM Stock and 5G
Bank of America analyst Tal Liani reiterated a buy rating on QCOM, citing revenue opportunities with Apple. He also has a $100 price target on the stock.
Liani also contends that if “all iPhone models include 5G capabilities, Apple could contribute nearly $4 billion in cumulative sales to Qualcomm by fiscal year 2022.”
Canaccord Genuity’s T. Michael Walkley raised his price target on the stock as well from $87 to $101 with a buy rating. He says 5G smartphones will offer the company the opportunity to “sell 50% more dollar-chip content per device than the prior 4G generation.”
As even Qualcomm points out, 5G could lead to substantial growth.
In fact, QCOM expects global smartphone makers to ship up to 450 million 5G handsets in 2021, and another 750 million in 2022. As a result, Qualcomm will benefit because phones will need more chips.
Earnings Growth Has Been Solid
Over the last few months, QCOM posted adjusted fiscal-Q4 EPS of 78 cents, which was above forecasts for 71 cents. Revenue of $4.8 billion was in line with expectations for $4.76 billion.
For the current quarter, it expects sales of between $4.4 billion and $5.2 billion and EPS of 80 to 90 cents. Analysts on average are looking for EPS of 81 cents on sales of $4.83 billion.
“We exit the fiscal year having successfully executed on our strategic priorities: helping to drive the commercialization of 5G globally, completing a number of important anchor license agreements and executing well across our product road map,” said CEO Steve Mollenkopf. “Our technology and inventions leave us extremely well positioned as 5G accelerates in 2020.”
The Bottom Line on QCOM Stock
With the 5G boom just getting underway, QCOM has significant opportunity ahead of it – especially as it supplies Apple iPhones with chips. While there are still analysts that believe 5G is priced into QCOM, I strongly believe there’s plenty of growth and upside remaining. By mid-2020, QCOM could be a $100 stock.
As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.
