Qualcomm: Good Times Ahead

Qualcomm is trading in the green today, and analysts believe that the stock will continue its rally as good times have started for the chip maker company, which had been reeling under several problems over the last few years. To start with, the company is now free from the anti-trust problems after an appeals court tossed a ruling, which claimed that Qualcomm was involved in anti-competitive practices. This will give Qualcomm a chance to focus more on its innovation and product development.

The 5G Catalyst

Qualcomm is expected to be the biggest beneficiary of the 5G revolution that is about to engulf the world. Qualcomm has licensing agreements with all major smartphone companies, including Apple. Qualcomm will start gaining huge royalties due to its 5G equipment installed in 5G-enabled smartphones. The company’s RFFE (RF front end) business has a serviceable available market opportunity (SAM) of $13 billion, with a potential to reach $18 billion by 2022.

Qualcomm investors also cheered recently when the company announced its that its longstanding dispute with Huawei over licensing royalties is now over. The company now has no barrier or obstacle in the 5G market. As a result, Bernstein’s Stacy Rasgon upgraded Qualcomm from Market Perform to Outperform and raised the price target from $105 to $135.

Susquehanna analyst Christopher Rolland said in a report that Qualcomm will get $1.8 billion in back royalties after the settlement, along with $200 million to $250 million in Qualcomm technology licensing. The analyst also upped his price target to $125 from $110.