Qualcomm investors had a rough year. Share are down 32% year to date after multiple outlook cuts. Most recently in November it forecast less revenue than expected for the December quarter, citing “rapid deterioration in demand” for smartphones.
But Chatterjee believes there are three reasons Qualcomm shares can do better in 2023.
“Stabilization of the smartphone market”—The analyst expects a recovery in China demand as the Asian country starts to loosen Covid restrictions and reopen the economy.
“Cycling past the peak inventory digestion”—Chatterjee doesn’t expect the chip-inventory glut problems at smartphone makers to get worse than the current December quarter.
“Potential restocking”—Once Qualcomm’s customers get more optimistic about improving demand, and the company returns to quarter-on-quarter growth by the second quarter of 2023, he expects to see more orders for the company’s chips.
Qualcomm stock is up 1% to $124.87 in Wednesday trading.
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Chatterjee also noted Qualcomm’s valuation of 11 times next-12-months earnings per share is considerably below the chip stock’s 16 times historical average.
“Qualcomm shares are trading well below their long-term average multiples, despite limited earnings downside in the near term and the potential for earnings upside in the medium term,” he wrote.
Qualcomm Stock Could Rise in 2023. J.P. Morgan Cites 3 Reasons Why.
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Qualcomm President and CEO Cristiano Amon.
Ethan Miller/Getty Image
J.P. Morgan predicts Qualcomm, a maker of mobile processors and 5G wireless chips, is primed for a comeback next year.
On Wednesday, analyst Samik Chatterjee reaffirmed his Overweight rating on Qualcomm stock (ticker:
QCOM
) with a $185 price target.
Qualcomm investors had a rough year. Share are down 32% year to date after multiple outlook cuts. Most recently in November it forecast less revenue than expected for the December quarter, citing “rapid deterioration in demand” for smartphones.
But Chatterjee believes there are three reasons Qualcomm shares can do better in 2023.
Qualcomm stock is up 1% to $124.87 in Wednesday trading.
Advisor Newsletter
Advisor Daily
A collection of our top stories from the day, delivered every evening. Stay on top of the latest advisor news, community commentary, and opinion from industry leaders.
Chatterjee also noted Qualcomm’s valuation of 11 times next-12-months earnings per share is considerably below the chip stock’s 16 times historical average.
“Qualcomm shares are trading well below their long-term average multiples, despite limited earnings downside in the near term and the potential for earnings upside in the medium term,” he wrote.
Write to Tae Kim at [email protected]
Source: https://www.barrons.com/articles/qualcomm-stock-chip-rise-51671041362?siteid=yhoof2&yptr=yahoo