On Thursday, CFRA made a positive shift in its stance on Qualcomm (NASDAQ:QCOM) shares, upgrading the stock from Hold to Buy and increasing the price target to $200 from the previous $155. The research firm highlighted several factors contributing to this optimistic outlook.
The analyst noted that despite some concerns over the growth of iPhone units, the overall trajectory for global handset units is on the mend, expected to be flat to positive in calendar year 2024. A significant 10% growth is anticipated for 5G phones. Qualcomm is reportedly reaping the benefits of improved demand in China, where premium Android devices are performing well in sales.
Furthermore, Qualcomm's involvement in the Windows AI personal computer market is seen as a promising new avenue for growth. CFRA also expressed confidence in Qualcomm's expanding automotive pipeline, which has grown to $45 billion, up from $30 billion in September 2022. The automotive sector is projected to contribute over $4 billion in annual revenue by the fiscal year 2026.
The upgrade by CFRA is rooted in the belief that Qualcomm will continue to diversify its sales across various sectors. The firm sees Qualcomm as a long-term winner in on-device artificial intelligence, given the company's increasing total addressable market (TAM) in AI PCs, smartphone content, autonomous vehicles, and new applications in the Internet of Things (IoT) and industrial sectors.
InvestingPro Insights
Amidst CFRA's upgrade of Qualcomm to Buy status, several InvestingPro metrics suggest a robust financial outlook for the company. Qualcomm's market capitalization stands strong at $201.13 billion, reflecting its significant presence in the industry. The company's P/E ratio is at a healthy 23.79, with an adjusted P/E ratio for the last twelve months as of Q2 2024 at 21.7, indicating a reasonable valuation relative to earnings. Moreover, Qualcomm's revenue for the last twelve months as of Q2 2024 is reported at $36.41 billion, despite a revenue growth contraction of 11.35% in the same period.
InvestingPro Tips highlight Qualcomm's consistency and stability, with the company having raised its dividend for 21 consecutive years and maintaining these payments for 22 consecutive years. These dividends yield 2.07% as of the latest data, with a growth of 6.25% in the last twelve months as of Q2 2024. Additionally, Qualcomm's stock trades with low price volatility, which may appeal to investors looking for stable investment opportunities.
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