Qualcomm (QCOM) PT Raised to 'Street High' $225 at Canaccord Genuity After CEO Fireside Chat, Sees Multiple Expansion

Canaccord Genuity analyst T. Michael Walkley raised the price target on Qualcomm (NASDAQ: QCOM) to a "Street High" $225.00 (from $200.00) while maintaining a Buy rating after a fireside chat with President and CEO Cristiano Amon at the firm's 41st Annual Growth Conference.

"With global smartphone demand recovering, supply constraints easing, and non-smartphone and higher-margin QCT revenue ramping, Qualcomm is well-positioned to benefit from the long-term 5G investment cycle," Walkley commented.

The analyst sees strong earnings through F2022 and beyond as 5G smartphones ramp. He sees 5G benefiting Qualcomm with 50% greater content than a 4G smartphone. Further, the analyst notes the RF business ramps, and strong trends in IoT and automotive augment overall revenue growth and expand margins.

For QCT, they anticipate increasing smartphone dollar content share with leading Android OEMs as 5G smartphone shipments ramp as evidenced by the strong Snapdragon 7 and 8 series design wins. They also anticipate overall market share gains with a full year shipping to Apple and new wins with Honor and other Android OEMs gaining share from Huawei.

"Qualcomm has a strong 5G leadership position that should not only result in strong share gains with leading smartphone OEMs but also drive strong long-term growth in IoT, RF, and automotive," the analyst added.

Walkley highlighted three reasons why they believe the multiple should expand closer to large cap semi leaders:

1. Sustainable higher QCT margins.
2. Diversifying revenue mix should help the multiple.
3. Investor concerns over Apple creating its own 5G modem likely not as material to the model as feared.

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