On Wednesday, Susquehanna adjusted its outlook on Qualcomm Inc (NASDAQ:QCOM), increasing the share price target to $205 from the previous $175, while retaining a Positive rating.
The decision follows market share changes observed in the first quarter, with Qualcomm experiencing a decline in its application processor (AP) share at Samsung (KS:005930) due to the latter's Exynos gains in their Galaxy S24 model, and MediaTek seeing an increase in its share.
Qualcomm's share fell by 11% quarter-over-quarter, now holding approximately 53% of the market, whereas MediaTek's share rose by 20%, reaching around 30%. Specifically, at Samsung, Qualcomm's share dipped to 53%, a significant drop from 83% in the fourth quarter of 2023. This shift is attributed to Exynos processors being used in certain Galaxy S24 and S24+ models, although not in the S24 Ultra.
The changes in market dynamics also revealed that Qualcomm's share went from a full 100% in the Galaxy S23 to roughly 80% in the S24, marking a notable presence of Exynos in the newer models. Conversely, in other partnerships, Qualcomm saw an increase, achieving a 100% share at Xiaomi (OTC:XIACF), Coolpad, and ZTE (HK:0763), which is a 25% uptick.
However, the news was not all positive for Qualcomm, as their share at Vivo and Oppo dropped dramatically by 58%, landing at 42%. These alterations in market share distribution between Qualcomm and its competitors have led to a mixed outlook, with implications that could be favorable for MediaTek and less so for Qualcomm. The updated price target reflects these market share changes and their potential impact on Qualcomm's business.
InvestingPro Insights
In light of the recent adjustments to Qualcomm's market share and the updated price target from Susquehanna, certain metrics and InvestingPro Tips can provide a deeper understanding of Qualcomm's current position. Qualcomm has demonstrated consistency and resilience in its financial practices, as indicated by its track record of raising its dividend for 21 consecutive years and maintaining dividend payments for 22 consecutive years. This consistency is a testament to the company's stability and commitment to shareholder returns.
From a valuation perspective, Qualcomm is trading at a Price/Earnings (P/E) ratio of 22.93 based on the last twelve months as of Q1 2024, which reflects investors' expectations of future earnings. However, the Price/Book ratio stands at a high 8.5, suggesting that the stock may be valued more richly compared to the company's book value. The strong return over the last three months, with a 25.26% price total return, illustrates a positive short-term performance that may interest investors looking for momentum.
For those seeking more detailed analysis and additional insights, there are more InvestingPro Tips available for Qualcomm, including the company's position as a prominent player in the Semiconductors & Semiconductor Equipment industry and its liquidity status. To access these insights, visit InvestingPro and consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With InvestingPro, investors can explore an extensive list of tips that can further inform their investment decisions.
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