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Qualcomm Inc QCOM

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Morningstar’s Analysis

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We Like Qualcomm’s Focus on Diversification at its Investor Day; Raising FVE to $163 Per Share

Abhinav Davuluri, CFA Sector Strategist

Analyst Note

| Abhinav Davuluri, CFA |

On Nov. 16, Qualcomm hosted an investor day at which management discussed its outlook for the firm’s prospects. Notably, Qualcomm’s guidance assumes the firm will have only 20% share of Apple’s 2023 iPhone model, as it expects Apple to deploy its own modem by that time. While this is sooner than we had anticipated, we’re not surprised that Qualcomm expects Apple to shift to an internal modem solution, and we expect Qualcomm to be able to achieve midteens chip business, or QCT, growth via the ongoing 5G transition at Android OEMs as well as momentum in RF front-end, automotive, and IoT. We’re raising our fair value estimate to $163 per share from $144, as we incorporate the stronger growth outlook for narrow-moat Qualcomm’s QCT segment. However, with the stock up over 30% over the past two weeks, we recommend prospective investors seek a wider margin of safety before committing capital to the stock.

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Company Profile

Business Description

Qualcomm develops and licenses wireless technology and designs chips for smartphones. The company's key patents revolve around CDMA and OFDMA technologies, which are standards in wireless communications that are the backbone of all 3G and 4G networks. The firm is a leader in 5G network technology as well. Qualcomm's IP is licensed by virtually all wireless device makers. The firm is also the world's largest wireless chip vendor, supplying nearly every premier handset maker with leading-edge processors. Qualcomm also sells RF-front end modules into smartphones and chips into automotive and Internet of Things markets.

5775 Morehouse Drive
San Diego, CA, 92121-1714
T +1 858 587-1121
Sector Technology
Industry Semiconductors
Most Recent Earnings Sep 30, 2021
Fiscal Year End Sep 27, 2021
Stock Type Cyclical
Employees 45,000