Qualcomm Stock Rises with Analyst Upgrade

Analyst Christopher Danely has upgraded Qualcomm shares from Neutral to Buy, expressing confidence in a recovery within the handset market. He has also raised the target stock price to $160 from $110. In premarket trading on Friday, Qualcomm stock saw a 1.4% increase, reaching $141.03.

Danely’s research note points to ongoing inventory replenishment in the handset space, which is expected to have a positive impact on both revenue and margins at Qualcomm. As a major supplier in the smartphone market, Qualcomm’s success heavily relies on the demand for these devices. The company faced challenges in 2023, when smartphone demand experienced a setback.

According to the International Data Corporation, worldwide mobile phone shipments are projected to decline to 1.37 million units in 2023, marking a decrease of 4.4% from 1.44 million in 2022.

However, recent indicators suggest a positive shift for Qualcomm. During the fourth-quarter earnings call in November, Chief Financial Officer Akash Palkhiwala highlighted early signs of stabilization in the demand for global 3G/4G/5G handsets.

Danely’s research note further emphasizes that replenishment is expected to continue at least through 1Q24, with Qualcomm potentially gaining share at Samsung. Additionally, an improvement in sales trends is anticipated to enhance Qualcomm’s margins.

Further insights into how the recovery in the cell phone market will impact Qualcomm are expected with the release of the company’s first-quarter earnings report on Jan. 31.

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