Makers of wireless chips for smartphones should benefit from a strong product cycle in the second half of 2021, a Wall Street analyst said Monday. The trend is positive for Qualcomm stock and its peers.
“Handsets are our favorite place to be in our (semiconductor) coverage at the moment, due to what we believe to be favorable demand trends, low inventory and relatively lower valuations for handset semi suppliers relative to the broader group,” Raymond James analyst Chris Caso said in a note to clients.
He reiterated his strong buy rating on Qualcomm (QCOM) with a price target of 190. Caso said Qualcomm stock is his “favorite handset idea.”
Caso also maintained his outperform ratings on Qorvo (QRVO) and Skyworks Solutions (SWKS).
Qualcomm Stock Drops
In morning trading on the stock market today, Qualcomm stock sank 0.9%, near 138.50, amid an overall down day for stocks. Qorvo stock fell 0.6%, near 186.50. And Skyworks stock slid 0.8%, near 186.60.
Apple (AAPL) has made robust orders for its upcoming iPhone 13 handsets, Caso said. This optimism is “favorable for both Apple and its suppliers,” he said.
Meanwhile, wireless chipmakers also should benefit from Chinese smartphone manufacturers seeking to replace older high-end Huawei handsets in the market, Caso said. U.S. trade restrictions have cut off Huawei from the latest chips.
Plus, the transition to 5G wireless networks remains a key theme for the industry.
Goldman Upgrades Qualcomm
Elsewhere on Wall Street, Goldman Sachs upgraded Qualcomm stock to neutral from sell. Goldman analyst Rod Hall said the outlook for the second half of 2021 is improving.
“The company is poised to benefit from multiple tailwinds in second-half 2021, including an earlier iPhone launch and improving supply situation,” Hall said in a note to clients.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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