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Vivek Kumar
Qualcomm stock

Qualcomm Inc, a multinational semiconductor and telecommunications equipment company, is lobbying the United States government to roll back restrictions on the sale of advance components to Huawei Technologies Co. after the Commerce Department blacklisted the Chinese telecom giant, according to The Wall Street Journal report.

The Chipmaker is lobbying to sell chips to Huawei that the Chinese company would include in its 5G phones. With those restrictions, the U.S. has handed Qualcomm’s foreign competitors a market worth as much as $8 billion annually, the company said in the presentation, the WSJ said.

“We are very positive about Qualcomm’s competitive positioning and the strength of 5G, which is continuing its rollout globally. We raise our target price to $130, 20x our FY21E as the company continues to overachieve expectations. Our rating and target price assume that the S&P 500 remains unchanged over the next 12 months,” said Louis Miscioscia, equity analyst at Daiwa Capital Markets America.

Qualcomm stock forecast

Twenty-one analysts forecast the average price in 12 months at $115.12 with a high forecast of $137.00 and a low forecast of $90.00. The average price target represents a 6.35% increase from the last price of $108.25. From those 21, 13 analysts rated ‘Buy’, seven analysts rated ‘Hold’ and one rated ‘Sell’, according to Tipranks.

Morgan Stanley target price is $121 with a high of $139 under a bull scenario and $58 under the worst-case scenario. Qualcomm had its price target lifted by Royal Bank of Canada to $106 from $81. They currently have a sector perform rating on the wireless technology company’s stock.

Several other equity analysts have also updated their stock outlook. Deutsche Bank lifted their price target to $115 from $100 and gave the stock a buy rating. Canaccord Genuity lifted their price target to $115 from $102 and gave the stock a buy rating.

We think it is good to buy at the current level and target at least $115 as 100-day Moving Average and 100-200-day MACD Oscillator signal a strong buying opportunity.

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Analyst comment

“We see an improvement in smartphone demand in 2H20 after bottoming 1H20 due to Covid-19. We also see 5G adding greater dollar content and supporting industry-wide handset volume growth. QCOM’s leadership in cellular technologies (3G/4G/5G) puts the company in a favourable position to maintain leading market share,” said Joseph Moore, equity analyst at Morgan Stanley.

“The potential elimination of a major competitor in the Chinese market, HiSilicon, should benefit QCOM as Huawei currently does not pay royalties. To the extent competitors that do pay royalties are able to pick up market share, that would be beneficial for QCOM,” the analyst added.

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