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Another Analyst Gets Even More Bullish on Qualcomm

By Evan Niu, CFA - Apr 8, 2013 at 9:00PM

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Analysts are increasingly bullish on the mobile chip giant, despite intensifying competition from other chip makers. Qualcomm's advantages may prove too difficult for rivals to easily overcome.

Following a bullish note on Qualcomm (QCOM 3.65%) from Susquehanna analyst Chris Caso, the mobile chip giant is getting another analyst vote of approval today. This time, we're talking about Canaccord Genuity analyst Mike Walkley boosting his estimates on Qualcomm's prospects.

The analyst is reiterating a "buy" rating on the company while adding a couple bucks to his price target, bringing it to $85. Walkley believes that Qualcomm's core businesses are holding up admirably to recent assaults from Broadcom (NASDAQ: BRCM), Intel, and NVIDIA (NVDA 5.38%). In fact, he's even raising his market share estimates.

In February, Broadcom announced a new LTE baseband chip to target the discrete modem market, supporting next-generation technologies like LTE Advanced carrier aggregation. There is even speculation that Broadcom is looking to expand its relationship with Apple beyond Wi-Fi combo chips, and that the company was hoping to score another iPhone spot.

That same month, NVIDIA reached a major competitive milestone with its Tegra 4i. Previously code-named "Grey," the Tegra 4i is NVIDIA's first applications processor with an integrated LTE modem. Qualcomm's focus on integration has been a key driver of its smartphone market share gains, and NVIDIA wants a piece of that success.

Even though rivals are sampling competing chips this year, Canaccord believes that Qualcomm's third-generation chipsets still boast considerable advantages to the first-generation silicon of other companies, particularly in areas like global and support and TD inclusion. LTE frequency fragmentation is also a tough nut to crack for newer entrants.

Like Caso, Walkley also sees Qualcomm benefiting greatly from Samsung's new Galaxy S4. While only about a third of Galaxy S III variants were LTE enabled, the analyst estimates that two-thirds of Galaxy S4 variants will feature LTE connectivity. Qualcomm's Snapdragon processors also seem to be in more Galaxy S4 variants this year instead of Samsung's own Exynos. Add in the fact that Galaxy S4 units should come in at about 100 million over the next year, up from approximately 65 million Galaxy S III units to date, and you get a recipe for some healthy revenue upside.

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Stocks Mentioned

QUALCOMM Incorporated Stock Quote
QUALCOMM Incorporated
QCOM
$139.76 (3.65%) $4.92
NVIDIA Corporation Stock Quote
NVIDIA Corporation
NVDA
$188.11 (5.38%) $9.60
Apple Inc. Stock Quote
Apple Inc.
AAPL
$149.64 (4.08%) $5.86
Intel Corporation Stock Quote
Intel Corporation
INTC
$44.55 (2.46%) $1.07

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