Demand for high-end and flagship smartphones is strong, according to supply chain research performed by KeyBanc. This bodes well for Qualcomm (QCOM 2.14%), reasons KeyBanc analyst John Vinh. Vinh reiterated his overweight rating on Qualcomm stock to start the week and raised his price target from $180 to $205. The new price target represents a potential upside of about 18% over the next 12 months or so.
Winning market share
KeyBanc sees momentum building for Qualcomm on multiple fronts in the smartphone market. While smartphone maker Samsung opted to use either Qualcomm's Snapdragon chips or its home-grown Exynos chips in its Galaxy S24 family, depending on the model and market, KeyBanc expects Qualcomm to regain a 100% market share for Samsung's upcoming Galaxy S25 family.
KeyBanc also sees Qualcomm gaining market share in the mid-range from Taiwan-based MediaTek. Qualcomm has seen its overall smartphone processor market share slip from 32% in the third quarter of 2022 to 23% in the fourth quarter of 2023, according to Counterpoint Research. MediaTek is the market leader globally, with a particularly strong presence in low-end and mid-range phones.
An Arm PC opportunity
On top of solid prospects in the smartphone market, KeyBanc sees an opportunity for Qualcomm to make a splash in the PC market. Windows laptops powered by Qualcomm's upcoming Elite X chips are set to launch later this year, and early benchmarks are promising.
The challenge will be selling consumers on a non-Intel, non-Advanced Micro Devices laptop. It may take quite a while for the typical laptop buyer to warm up to an Arm-based laptop running a Qualcomm processor.
Is Qualcomm stock a buy?
Analysts expect Qualcomm to produce earnings per share of about $9.75 this year, which puts the forward price-to-earnings ratio at about 17.5. That doesn't look like an unreasonable valuation, given the company's growth opportunities in the mid-range smartphone market and the PC market.
