December 4, 2022

Qualcomm stands at Mobile World Congress.

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Pau Barrena / AFP via Getty Images

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JPMorgan says Qualcomm stock is not getting the respect it deserves from investors.

On Monday, analyst Samik Chatterjee reaffirmed his overweight rating for Qualcomm (ticker: QCom), citing low valuations.

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“Current valuations provide substantial upside, while downside remains limited despite smartphone headwinds,” he wrote. “We believe that the company is getting limited credit for the success of its foray into automotive and IoT” [internet of things]In addition to success in RFFE [radio frequency front end],

He also reiterated his $185 price target for the maker of mobile processors and 5G wireless chips. It’s up about 51% from where the shares are now. In Monday morning trading, Qualcomm stock rose 1.1% to $122.47.

Chatterjee said Qualcomm traded at just 9 times its fiscal year 2023 earnings-per-share estimate, which is 16 times the average for smartphone-chipset companies over the past five years. He is optimistic about Qualcomm’s mobile-chip business and its ability to capture market share.

“The discount to historical multiples is further limited downward by smartphone-market weakness, while the success of diversification provides ample opportunity to re-rate toward diverse peers,” he wrote. Smartphone makers should benefit significantly from sales of 5G modems and RFFE, as well as build up substantial momentum in non-handset end-markets, Qualcomm said.

In July, Qualcomm stock fell as the company forecast lower-than-expected revenue for the September quarter, citing softening smartphone demand.

The chip maker’s stock is down 33% this year, compared to a 38% drop in the iShares Semiconductor Exchange-Traded Fund (SOXX), which tracks the performance of the ICE Semiconductor Index.

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Write to Tae Kim at [email protected]