Just because a chip shortage exists, one should not negate all semiconductor companies and ignore their potential upsides. 5G innovations and capabilities are expanding into the internet of things (IoT), and the technology is highly coveted by consumers. Smartphone producers are dependent on the chips, and are poised to only continue expanding supply to meet a massive consumer demand. (See 5G stock comparisons on TipRanks)
Kevin Cassidy of Rosenblatt Securities reported on four firms central to the 5G saga, all of which are reporting earnings within the coming two weeks. Revenues for Qualcomm (QCOM), Skyworks Solutions, Inc. (SWKS), Qorvo (QRVO), and Ceva Inc. (CEVA) are all closely aligned with the global smartphone industry, which has seen a 12% gain over the last quarter. Cassidy is expecting a 20% gain in quarter-over-quarter smartphone production for the coming period, ending in September. Importantly, 5G capabilities are anticipated to be included in most major smartphone producers’ new products.
Starting with Qualcomm, the multinational semiconductor producer is likely to benefit the most from Xiaomi’s expanding market reach. QCOM provides application processors and 5G modem sockets for the tech company.
Cassidy reiterated a Buy rating on the stock, and provided a price target of $180. This target represents a potential 12-month upside of 27.72% from Tuesday’s closing price of $140.93.
Cassidy is enthusiastic about Qualcomm’s Q3 outlook, stating that several high-profile smartphone producers have announced their intended usage of the Snapdragon 888+ as a mobile processor. Furthermore, he is optimistic about QCOM’s expansion into the IoT. This expansion includes Windows 11 and the broader PC market, which is also expected to deploy 5G connectivity capabilities.
Qualcomm is expected to release earnings results after market hours on Wednesday, July 28.
On TipRanks, QCOM has an analyst rating consensus of Moderate Buy, based on 8 Buy and 4 Hold ratings. The average Qualcomm price target is $172.20, reflecting a possible 12-month upside of 22.19%.
Cassidy was pleased to report that Skyworks revenue was approximately 50% intertwined with Apple (AAPL) during Q2, and that he expects the semiconductor manufacturer to continue capturing market share when the iPhone 13 deploys.
The five-star analyst assigned a Buy rating on the stock, and declared a price target of $240 per share. This target represents a potential 12-month upside of 27.55% from Tuesday’s closing price of $188.16.
Skyworks’ share price is poised to benefit from the growth in demand for radio frequency technology in “smartphones, IoT, [and] automobilies.” The company’s acquisition of the Silicon Labs’ Infrastructure and Automotive business is expected by Cassidy to reap higher gross margins from its unique products.
On TipRanks, SWKS has an analyst rating consensus of Moderate Buy, based on 12 Buy and 6 Hold ratings. The average Skyworks Solutions price target is $214.94, suggesting a possible 12-month upside of 14.23%.
Skyworks is expected to release earnings results after market hours on Thursday, July 29.
As for Qorvo, Cassidy does not see the company far outperforming Wall Street consensus estimates for the upcoming September quarter. If there is to be some upside, it is expected to be limited and only due to higher-than-expected sales in smartphones. He does not anticipate Qorvo to outperform the likes of Qualcomm or Skyworks.
Cassidy reiterated a Hold rating on the stock, and declared a price target of $200. This target reflects a possible 12-month upside of 6.87% from QRVO’s Tuesday closing price of $187.15.
The analyst wrote that the expanding communications markets could provide upside for Qorvo only if the firm were to increase its wireless infrastructure spending.
Qorvo is expected to release earnings results after market hours on Wednesday, August 4.
On TipRanks, QRVO has an analyst rating consensus of Strong Buy, based on 11 Buy and 2 Hold ratings. The average Qorvo price target is $220.85, representing a possible 12-month upside of 18.01%.
Lastly, although Ceva has “strategically diversified its end market exposure toward IoT,” and even though less than 50% of its revenue is dependent on smartphone shipments, Cassidy still takes a neutral stance on the stock.
The five-star analyst assigned a Hold rating on the stock and provided a price target of $50. This would suggest a potential 12-month upside of 17.59%.
Cassidy explained that while a possible cooperation on a 5G modem with Apple may be in the works, he will be holding back enthusiasm until production actually begins. Along with 5G modems for Xiaomi and other major producers, he only expects commercialization of such products by 2023.
Ceva is expected to release earnings results before market open on Monday, August 9.
On TipRanks, CEVA has an analyst rating consensus of Strong Buy, based on 4 Buy ratings and 1 Hold rating. The average Ceva price target is $60.80, reflecting a possible 12-month upside of 42.99%.
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.